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.

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.

What is the difference between a stock and a liability?

A liability is an obligation consisting of an amount owed to another individual. A liability can also be money received in advance prior to its being earned. Stocks are divided into different categories that include common stock, preferred stock, and hybrid stock. Keep in mind a stock equals equity. Assets are linked to economic resources.