principal Definition | Business Dictionaries from AllBusiness.com
Facebook Twitter Google+ You Tube RSS Feed

Business Glossary

SEARCH THE BUSINESS GLOSSARY

Business Definition for: principal
principal

  1. face amount of a financial instrument on which interest accrues. For example, a $25,000, 8%, one-year note has a principal portion of $25,000 and an interest portion of $2000.
  2. carrying value of an obligation (i.e., bonds payable).
  3. amount invested, excluding return on investment.
  4. high-level individual (i.e., partner) in a CPA firm having major authority and responsibilities.
  5. owner, especially one with executive authority, of a business firm.

principal

In General:

  1. major party to a transaction, acting as either a buyer or a seller. A principal buys and sells for his or her own account and risk.
  2. owner of a privately held business.

Banking and Finance:
  1. face amount of a debt instrument or deposit on which interest is either owed or earned.
  2. balance of a debt, separate from interest. See also principal amount .

Investments: basic amount invested, exclusive of earnings.

principal

  1. face amount of a loan evidencing the amount repayable, exclusive of interest, according to the terms of the note securing the obligation. See also holder in due course .
  2. original amount of a time deposit or savings account on which interest is paid daily, monthly, or at other intervals. See also compound interest .
  3. primary borrower in a loan, as distinguished from the guarantor or co-maker. If the borrower defaults, the guarantor is secondarily liable.
  4. person who has controlling interest in a joint venture, corporation, or partnership.
  5. person who appoints another to act on his behalf as agent or attorney in fact .
  6. property of an estate or investment trust, exclusive of income.

principal

insurance company that employs or contracts with an insurance agent to represent it.

See also surety bond
principal

  1. one who owns or will use property. For example, the principals to the lease are the landlord and the tenant; principals to a sale are the buyer and the seller.
  2. one who contracts for the services of an agent or broker; the broker's or agent's client.
  3. amount of money raised by a mortgage or other loan, as distinct from the interest paid on it. See also principal amount .

principal
  1. the one who owns or will use property.
    Example: The principals to the lease are the landlord and tenant ; principals to a sale are the buyer and seller.

  2. one who contracts for the services of an agent or broker , the broker's or agent's client .
    Example: Grey wishes to purchase a shopping center. Grey engages Jamison, a mortgage broker, to arrange financing . Jamison arranges a loan in the name of the principal, Grey. The loan is payable as interest only for 5 years, with the principal payable as a balloon payment at the end of year 5.

  3. the amount of money raised by a mortgage or other loan, as distinct from the interest paid on it.
    Example: Abel arranged a loan at 6% interest with $100,000 principal on his home. The first monthly payment is $1,200 including $500 interest and $700 that amortized the principal.

Copyright © 2005, 2000, 1995, 1987 by Barron's Educational Series, Inc., Reprinted by arrangement with Publisher.
Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2000, 1995, 1991, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2004, 2000, 1997, 1993, 1987, 1984 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.

Newsletter

Weekly Roundup

Sign up for our weekly Experts roundup, delivered to your inbox each Saturday morning.

Most Recent From our Experts

AllBusiness Experts

AllBusiness Greatest Hits

;
Close

Real Business Owners, Real Business Advice!

Sign up for practical, real-world solutions from successful business owners delivered to your inbox each Saturday morning. FREE.