Question:

Why stock cannot have a credit balance?

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Why stock cannot have a credit balance?

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  1. / Credit is borrowed money which must be paid back with interest.  Therefore, the money is lost, plus you owe a little more money for borrowing it.

    Stock is a comodity bought for an exact amount of money, which may or may not change in price. Therefore, it may be money gained (or lost), plus you owe a little more for buying and selling it.

    You don't borrow stock.  It is owned.  Credit is borrowed, and not owned.

    Credit balance (amount owed) is outstanding debt.

    Stock balance (face value) is not outstanding debt.


  2. Is this stock you own?  If this is stock you own then it is an asset, and it must have a debit balance unless it is worthless.  Then it could be a zero balance.  

    If this is stock that you are issuing, then it can be a credit balance.  Then it is owner's equity.

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