Which of the following best describes the term "principal" in interest calculations?

مندرجہ ذیل میں سے کون سود کے حساب میں اصطلاح "پرنسپل" کی بہترین وضاحت کرتا ہے؟

The amount of interest earned

The rate of interest charged

The original sum of money invested or borrowed

The total amount after interest

The principal is the initial amount of money borrowed or invested.

It serves as the basis for calculating interest.

It is the original amount before any interest is earned or paid.