Question

4) Letters of credit are shown by a bank under
(a) Deposits
(c) Other Liabilities
(t-1)
(b) Advances
(d) Contingent Liabilities​

Answer 1

Answer:

contingent Liabilities

Answer 2

Letters of credit are shown by a bank under contingent Liabilities​.

• A Letter of credit remains a legal document that plays a part in reasonably assuring the direct seller the prospective purchaser's necessary payment.
• The bank releases the letter assuring that the party is paid completely and on time.  
• It is a contingent liability or a possible loss that can typically take place in the future dependent on a particular case.
• As a direct result of default, the bank will typically pay the full or the residual sum of money on behalf of the buyer if the buyer is unable to make the payment.