Principal

Accounting Terms Dictionary

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Principal

Principal is a word that means amount borrowed.

If a person borrowed $1,000 for a year at 10% interest, at the end of a year he would have to repay $1,100. $1,000 of this amount is the repayment of the original $1,000 he borrowed. The $1,000 is the principal. The remaining $100 is the interest.

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