Common stock
Financial Accounting glossary · Stockholders' Equity
Definition
Equity security representing residual ownership in a corporation.
Common stock in plain English
Common stock is a slice of ownership in a corporation — own a share and you own a tiny piece of the whole company. "Residual" is the key word: if the company is ever wound down, common stockholders get whatever's left only after everyone else (lenders, other claimants) has been paid, so they're last in line. Think of splitting a pizza where the delivery driver and the person who paid for it get their cut first, and shareholders share whatever slices remain. In exchange for that last-place risk, owners get the upside if the company thrives — a vote and a claim on future profits.
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