THE PRINCIPAL IS THE $3000 WHICH SAM INVESTED.
In accounting, the principal refers to the amount of money which the investor used to do a particular business over a specific period of time. The profit made during this period is called return on investment [ROI]. In the question given above, $300 is the return on investment.
In the case of borrowing, the principal refers to the total amount of money that is borrowed for a period of time. The money will have to be repaid with an interest on it.
