The idea of stock and flow is mostly employed in calculating a country’s national income. Various concepts relating to national income are classed as stock and flow. Understanding national income means knowing the difference between the two.
|It is measured per unit of time|
|Flow is time dimensional|
|Measured after an entire flow|
Stock is the complete number of commodities, assets, obligations, or monies kept, ready for distribution or sale, or retained by a corporation on a certain date. Furthermore, the stock is measured at a specific period, indicating the current quantity and quantity of that asset or commodity gathered in the past. Stock in accounting refers to positions in or ownership of the total value of an asset (both financial and non-financial) and liabilities as of a Balance Sheet date.
Flow is the movement of any resource, product, or money from one location to another and is measured through time. The word ‘interval of time’ refers to the period the flow of the asset or commodity is measured. In accounting, flow refers to the entire value of transactions involving purchasing and selling goods that occurred within a certain fiscal year.
Stock vs. Flow
Stock is the amount of any commodity or asset available, accumulated, or owned at any moment. Flow, on the other hand, is the difference or changes in the commodity or asset during a certain time, i.e., between two consecutive dates.
Furthermore, the stock is a fixed term, which means that anytime we measure stock, we get a snapshot of the things that are available or left at the time.
Flow, on the other hand, is a dynamic term since it considers factors that demonstrate continual activity, development, or change.