Capital Stock Defined

Cite this article as:"Capital Stock Defined," in The Business Professor, updated December 13, 2018, last accessed October 20, 2020,


Capital Stock Defined

The Capital Stock of a company refers to the total number of preferred and common shares that a corporate entity has issued to Shareholders. This will be some percentage of the total number of shares authorized in its articles of incorporation.
The term capital stock can be used in a number of ways. Shareholders often use the term to refer to the shares of stock in a cooperation that they own. Accounts use the term capital stock to refer to a portion or all of the capital paid by shareholders in exchange for the stock.

A Little More on Capital Stock

For purposes of accounting, capital stock consists of the nominal value (generally designated by the par value assigned to the stock at the time of authorization) of all shares that has been issued to shareholders. Shares are issued above their par value (issued at a premium) or at less than their par value (at below par or a discount to par).

References for Capital Stock

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