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Sundry Expenses Meaning
Sundry expenses, also known as miscellaneous expenses, are the expenses incurred by the company during the accounting period under consideration. These are generally of a small value and are not as important to be mentioned individually in the separate ledger account, thus clubbed together under one head based on the company’s sundry expenses list.
Simply put, Sundry expenses are those 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 accounts but are collectively classified as a group.
Sundry Expenses Explained
Sundry Expenses are a regular business expense line item found in the Income Statement of all organization. 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.
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 other sundry expenses without increasing separate ledger accounts and the 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" refers to 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 expense or capital.
How To Calculate?
By following these steps, one can accurately calculate and manage other sundry expenses, which is crucial for maintaining financial transparency and making informed decisions in both personal and business finance.
- Collect all receipts, invoices, and bills related to miscellaneous expenses incurred during a specific period.
- Carefully categorize each expense into relevant groups, such as office supplies, travel, or entertainment.
- Sum up the expenses within each category to find the total expenditure for each.
- Add all the category totals to find the overall sundry expenses for the given period.
- Examine the nature of these expenses. Are they essential for business operations or discretionary? This analysis can help in budgeting and cost control.
- Ensure all expenses are properly recorded in your financial records or accounting software.
- Periodically review sundry expenses to identify any trends or areas where cost-saving measures can be implemented.
Examples
Now that we understand the basics, how to calculate, and the items under the sundry expenses list, let us apply the knowledge to practical application through the examples below.
Example #1
BL International is in 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 that an individual logo was not pasted on 200 customized shoes at the time of delivery. 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 Expenditure
- Unusual in nature
- Must be a small amount
- Must not be of a regular nature
Example #2
In May 2023, the SNP Westminster group’s accounts showed some inexplicable numbers given that they were facing a threat of bankruptcy if they did not find a new auditor in a month’s time.
Since the 2015 general election, where the number of MPs grew from 6 to 56, they spent £473,633 on research and £211,736 on travel. An additional spending of £607,330 has been recorded as “Sundry expenses” in their books of accounts.
Since this period the group’s average ‘miscellaneous expenses’ was accounted at £230,000, which makes it obvious that none of it went towards wages or costs to run their offices as they are listed separately.
In the seven years (From 2015 to 2021), the Westminster group recorded an income of a figure just shy of £10 million, almost all of it from public subsidies, while their expenses were recorded at £9.6 million.
Sundry Expenses Explained in Video
How to Record it in the Financial Statements
We show other sundry expenses under the head Income Statement. Since it is an expense, we show it on the debit side of the Income Statement.
Expenses | Amount | Income | Amount |
---|---|---|---|
To Rent Expense | By Gross Profit b/d | ||
To Salaries | By Income from Commission | ||
To Sundry Expense | |||
To Net Profit |
Journal Entries
Let us understand how to record items on a sundry expenses list through the journal entries below.
Date | Particulars | Debit | Credit |
---|---|---|---|
01.03.18 | Sundry Expense | 1000 | |
To Cash/Bank Account | 1000 | ||
(Journal Entry on Payment of Sundry Expense by Cash/Bank) |
Date | Particulars | Debit | Credit |
---|---|---|---|
31.03.18 | P&L Account | 1000 | |
To Sundry Expense | 1000 | ||
(Journal Entry on Transfer of Balance in Sundry Expense Account to Income Statement) |
Sundry Expense vs. General Expense
Both sundry and general expenses are an all-pervasive cost for businesses. However, they are often misunderstood for one another. Let us understand the differences through the comparison below.
Basis for comparison | Sundry Expense | General Expense |
---|---|---|
Meaning | It refers to any business expense of a random nature, a small amount, and can be classified under any regular business expense. | It is a business expense of a regular nature and an amount larger than the sundry expenses. |
Regularity | These are irregular. | These are regular. |
Amount involved | Comprise of a small amount | Usually, the amount of general expense is good in quantum. Example: Salaries, Advertisement Cost, Raw material Cost |
Recommended Articles
This article has been a guide to Sundry Expense and its meaning. Here we explain its examples, journal entries, how to record and compare them with general expenses. You may learn more about accounting from the following articles –