What are Sundry Expenses?

In simple words, Sundry expenses are those expenses done in the regular course of business but are random. These comprise a small number of expenses compared to the overall expenses of the business, relatively insignificant. Such expenses are relatively small and infrequent and are not assigned to Individual Ledger accountsLedger AccountsLedger in accounting records and processes a firm’s financial data, taken from journal entries. This becomes an important financial record for future reference. It is used for creating financial statements. It is also known as the second book of entry.read more but are collectively classified as a group.

  • In regular business, many petty expenses are incurred for the smooth functioning of the business. However, these expenses are neither regular in nature nor significant in amount. Also, these expenses don’t fit into other standardized general ledger accounts such as Wages, Salaries, Advertisements, etc., to name a few.To record such expenses without increasing separate ledger accounts and administrative workload of an organization’s accounting department, 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 items that are irrelevant and unimportant to mention individually. These expenses may be related to a particular area of business and, in such cases, are clubbed as office Expenses, Manufacturing expenses, etc. These expenses are unusual and random and don’t include a regular a business expenseA Business ExpenseBusiness expenses are those incurred in order to successfully run, operate, and maintain a business. Travel & conveyance, salaries, rent, entertainment, telephone and internet expenses are all examples of business expenses.read more or capital.

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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 materials, Rent, Advertising Costs, etc., which are regular expenses in its day-to-day operations. In one of the recently shipped orders of 1000 customized shoes for its client XYZ International, it was found at the time of delivery that an individual logo was not pasted on 200 customized shoes. The company spent $50 on individual logos and stuck the same on the 200 customized shoes.

This $50 expense is Sundry Expenses. It’s not regular, and also it is a small amount. Hence, BL International is classified the same under Miscellaneous Expenses.

It is important to note here that it varies from industry to industry, and no particular item can be categorized, particularly under the head Sundry expense. The basic rule to keep in mind while classifying such expense:

  • Random or Infrequent ExpenditureUnusual in natureMust be a small amountMust not be of a regular nature

Sundry Expense vs. General Expense

Here are the critical differences between Sundry and General Expense

How to Record it in the Financial Statements

We show this Expense under the head Income Statement. Since it is an expense, we show it 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 in the Income Statement of all organizationIncome Statement Of All OrganizationThe income statement is one of the company’s financial reports that summarizes all of the company’s revenues and expenses over time in order to determine the company’s profit or loss and measure its business activity over time based on user requirements.read more. Its purpose is to club together all irregular, infrequent, and random nature expenses that can’t be classified under any regular business expense head. These expenses are small in the denomination and not routine.

Classifying an expense as a Sundry expense is not a criterion as what constitutes it in one organization or industry may not be it in another. Thus whenever an expense is classified under this head, one should follow the thumb rule, which states that:

  • Expenses should be random or Infrequent.Should be unusualIt must be a small amountMust 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 is to save the time and 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 classified under Sundry Expenses becomes regular and occur more frequently, they should move out of this head. And instead, report separately under their name that identifies the nature of the expense.

Sundry Expenses Video

This article has been a guide to what Sundry Expense is. Here we discuss its example and how to record it in the journal. We also discuss the critical differences between sundry and general expenses. You may learn more about accounting from the following articles –

  • Accounting Equation | ExplanationDeferred ExpensesWhat are Prepaid Expenses?Non Cash ExpenseConsequential Loss