Balance (B) is

Balance (B) is

• A. The amount owed on the loan at any given point in time (principal and interest)
• B. The annual interest earned
• C. The original loan amount
• D. The percentage rate of the loan

Answer: (A)

The balance is the amount you still owe on the loan at a given moment. It reflects the remaining principal and any interest that has accrued but hasn’t yet been paid. It’s not the annual interest earned (that would be income from a savings or investment), not the original loan amount (the initial principal borrowed), and not the percentage rate (the cost of borrowing expressed as a rate). Each payment typically covers current interest first and then reduces the principal, so the balance decreases over time as you continue to pay.

The balance is the amount you still owe on the loan at a given moment. It reflects the remaining principal and any interest that has accrued but hasn’t yet been paid. It’s not the annual interest earned (that would be income from a savings or investment), not the original loan amount (the initial principal borrowed), and not the percentage rate (the cost of borrowing expressed as a rate). Each payment typically covers current interest first and then reduces the principal, so the balance decreases over time as you continue to pay.