What does LG mean in ACCOUNTING

LG stands for Letter of Guarantee, and it is a legal document created and issued by a bank to assure the recipient that the issuer will fulfill their obligations as stated in the letter. It is commonly used in business transactions when one party needs assurance from another that they will meet certain expectations or requirements. LGs are also used in other contexts such as real estate or other financial services. The letter promises the potential seller or borrower of money that the guarantor, usually a bank, will meet its commitment. A Letter of Guarantee acts as an assurance to the beneficiary if there is any default on part of the principal debtor. It can be issued both for domestic and international transactions and should clearly state all responsibilities, liabilities, and timelines related to the agreement.