Abstract

This paper discusses the importance of “letter of credit” in foreign trade transactions and practices. In today’s changing and developing business world, trade has a larger volume than ever before and competition among companies are higher than it has ever been. That is the reason why companies which do export and import are looking for the best and most reliable way of doing their transactions. Reassurance of banks in foreign trade implementations for companies provides this safeground. This explains why letter of credit is the most preferred way of payment in foreign trade. Also, the records kept by the companies which do import and export and the records kept by banks belonging to firms are really important to accomplish the aim of the payment in letter of credit. In this paper, we mention the definitions, processing aids and the sides of payment related to letter of credit and discuss how accounting processes are carried out.