Q9Managerial Economics & Financial Accounting
Question
2 marks
Distinguish between stock and flow with examples.
Answer
A stock is measured at a specific point in time, whereas a flow is measured over a period of time.
- Stock Concept: A quantity measured at a specific, exact point in time. (Examples: Total wealth on Dec 31st, inventory in a warehouse, a company's capital).
- Flow Concept: A quantity measured over a continuous period of time. (Examples: Monthly income, daily sales revenue, annual depreciation).