Question

Inventory is a .......... concept whereas the change in inventory is a .......... concept.

• A. stock, flow
• B. flow, stock
• C. stock, stock
• D. flow, flow

Hint:

Stock = measured at a point in time; flow = measured over a period.

Answer 1

The Correct Option is A

Step 1: Define stock and flow with an analogy:
Think of a bathtub: the water level at any moment is a stock; the water flowing in or out per minute is a flow.

Step 2: Apply the analogy to inventory:
The quantity of unsold goods sitting in a warehouse on a given date is exactly like the water level — a stock. How much that level rose or fell during the year is exactly like the flow rate — a flow.

Step 3: Eliminate the other options:
Any option pairing that treats both as the same category (stock-stock or flow-flow) or reverses them fails this test.

Final Answer:
Option A: stock, flow.