Is common stock an asset or a liability?

No, common stock is neither an asset nor a liability. Common stock is an equity. Image source: Getty Images. What makes common stock an equity? Common stock is a type of security that represents an ownership position, or equity, in a company. When you buy a share of common stock, you are buying a part of that business.

Is common stock considered an asset?

Common stock held as an investment by an individual or small business is considered an asset. It is classified this way due to the fact future benefits in the form of cash flow are expected by holding the stock. Whether the classification of common stock is considered current or long-term depends on the company's intent and ability.

What is a share of common stock?

Common stock is a type of security that represents an ownership position, or equity, in a company. When you buy a share of common stock, you are buying a part of that business. If a company was divided into 100 shares of common stock and you bought 10 shares, you would have a 10% stake in the company.