Bank Guarantee Accounting Treatment

A Bank Guarantee Accounting Treatment and a letter of credit are similar in many ways but they’re two different things. The main difference between the two credit security instruments is the position of the bank relative to the buyer and seller of a good, service or basket of goods or services in the event of the buyer’s default of payment. These financial instruments are often used in trade financing when suppliers, or vendors, are purchasing and selling goods to and from overseas customers with whom they don’t have established business relationships.

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2 Responses to “Bank Guarantee Accounting Treatment”

  1. taher

    when i make a prepayment to a vendor and i receive a bank guarantee for it, how i enter into books this guarantee?

  2. shekhar

    What is the accounting treatment in books of Bank who issues a Bank gaurantee?