Sundry expenses also are known as the miscellaneous expenses are the expenses incurred by the company during the accounting period under consideration which is generally of the small value and is not as important to be mentioned individually in the separate ledger account and are thus clubbed together under one head.
What are Sundry Expenses?
Sundry expenses are those expenses done in the regular course of business but are random in nature and comprise of a small number of expenses compared to the overall expenses of the business, relatively unimportant and insignificant. Such expenses are relatively small and infrequent and as such are not assigned to Individual Ledger accounts but are collectively classified as a group known as Sundry Expenses.
- In day to day running of a business there are many small petty expenses which are incurred for smooth functioning of business, however these expenses are neither regular in nature nor they are big in amount and as such these expenses don’t fit into other standardized general ledger accounts such as Wages, Salaries, Advertisement, etc to name a few.
- In order to record such expenses without increasing separate ledger accounts and administrative workload of the accounting department of an organization, such expenses are grouped and clubbed together under the group head “Sundry Expenses”. It may also be referred to as Miscellaneous Expenses.
- The word “Sundry” is basically items which are irrelevant and unimportant to be mentioned individually. These expenses are unusual and random in nature and don’t include any business expense which is of a regular nature or of capital expense nature. These expenses may be related to a particular area of business and in such cases are clubbed as office Expense, Manufacturing expense etc.
Sundry Expenses Examples
Let’s take an example to understand this concept in detail.
BL International is into the business of shoe manufacturing. The company incurs various expenses like, Raw material, Rent, Advertising Cost, etc which are regular expenses in its day to day operations. In one of the recently shipped order of 1000 customized shoes for its client XYZ International, it was found at the time of delivery that an individual logo is not pasted on 200 customized shoes. The company spent $50 in purchasing individual logo and pasted the same on the 200 customized shoes.
This $50 expense is a Sundry Expenses examples it neither of a regular nature and also it is a small amount) and BL International classified the same under Miscellaneous Expenses.
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It is important to note here that it varies from industry to industry and there is no particular item which can be categorized particularly under the head Sundry expense. The basic rule to be kept in mind while classifying an expense as Sundry expense:
- Random or Infrequent Expenditure
- Unusual in nature
- Must be a small amount
- Must not be of a regular nature
Sundry Expense vs General Expense
Here are the key differences between Sundry and General Expense
| Basis for comparison | Sundry Expense | General Expense | ||
| Meaning | It refers to any business expense which of random nature, small amount and cant be classified under any regular business expense | It is basically the business expense of regular nature and an amount larger than the sundry expense. | ||
| Regularity | These are irregular in nature | These are regular in nature | ||
| Amount involved | Comprise of a small amount | Usually, the amount of general expense is good in quantum. Example: Salaries, Advertisement Cost, Raw material Cost |
How is it Recorded in the Financial Statements
This Expense is shown under the head Income Statement. Since it is an expense it is shown on the debit side of the Income Statement.
Journal Entry to Record a Sundry Expense
Final Thoughts
Sundry Expenses are a regular business expense line item found on the Income Statement of all organization. It is basically used to club together all irregular, infrequent and random nature expenses which can’t be classified under any regular business expense head. These expenses are small in the denomination and definitely not regular.
Classifying an expense as a Sundry expense is not a stand criterion as what constitutes it in one organization or industry may not be it in another. Thus whenever an expense is classified under Sundry Expenses, one should follow the thumb rule which states that:
- Expense should be random or Infrequent
- Should be unusual in nature
- Must be a small amount
- Must not be of a regular nature
Unlike the General Business Expenses which are categorized under Regular Ledger Heads such as Salaries, Wages etc, these expenses are recorded within an account called Sundry Expenses. The purpose behind using this account (Sundry Expenses Account) is to save the time energy of the accounting department in identifying the exact nature of these expenses and allocating them to other more precisely defined accounts. However, it is pertinent to note that once any of the expenses which are classified under Sundry Expenses becomes regular in nature and started occurring more frequently, they should be moved out of the head Sundry Expense and instead be reported separately under their own name that identifies the nature of the expense.
Sundry Expenses Video
Recommended Articles
This has been a guide to what is Sundry Expense. Here we discuss its example and how it is recorded in the journal. We also discuss the key differences between sundry and general expenses. You may learn more about accounting from the following articles –
