Unless you enjoy having embarrassing explanations with your accountant about how organizing receipts in shoeboxes is a best practice, then understanding the proper use of sundry expenses should be a priority.
The sundry line item on your profit and loss statement is a digital shoebox. It’s a place to put small, irregular, miscellaneous expenses, so that they show up on your books in a manageable way.
In this article, we’ll help you throw out that receipt-stuffed shoebox—or whatever outdated system your accountant has been begging you to stop using—by discussing sundry expenses in detail. We’ll offer some examples, give some comparisons, and explain how to record these expenses on your income statement
What are sundry expenses?
Sundry expenses, or sundries, are miscellaneous expenses that occur infrequently. Adding them to an income statement can be challenging because the individual costs can seem insignificant, and they don’t fit under any other line item.
What counts as sundry also depends on your industry and even your specific income statement. If you don’t have a line item for travel on your report, for example, then paying for an employee’s gas when they run an errand might be a sundry expense.
Another example could be a company that usually conducts transactions through an affiliated bank that doesn’t charge transaction fees. If, for some reason, a transaction has to be completed through a different bank that charges transaction fees, they could be considered a sundry expense. Why? Because they’re a rare, extremely unpredictable expense, that doesn’t need a new ledger row all its own.
Another factor that can influence which expense counts as a sundry is the size of the company. For a multinational corporation, a $50 travel ticket might be nominal enough to be termed as a sundry. For a small or medium-sized business, though, the same $50 could be a sizable amount that needs to be accounted for under its own account.
Individual sundry expenses can seem unimportant or insignificant on your balance sheet. But, when added together, they can pile up to make a significant expense that can affect your tax liabilities and even your net worth.
Characteristics of sundry expenses
The only utility of a sundry column is to account for expenses that are too vague or nominal to be properly classified. What counts as sundry expenses depends on the company, its tolerance for unclassified accounting statements, and relative numbers in the Profit and Loss (P&L) statement.
Of course, for a business making a hundred million dollars a year, a few hundred could be accounted as a sundry expense. But for a business making only a few thousand dollars a year, this would be a significant expense.
There are four criteria that can be used to identify sundry expenses. However, not all criteria need to be met for something to be counted as a sundry expense.
- Rare. As an individual occurrence, these don’t happen very often and cannot be predicted.
- Unusual. Sundry expenses include all miscellaneous expenditures that are unusual enough not to have a separate row to themselves on an accounting sheet. As mentioned above, though, what counts as unusual is highly subjective and depends on the business, its industry, and its size.
- Irregular. Sundry expenses occur so infrequently and randomly that it just isn’t feasible to make a separate line item for them. If a row on your balance sheet is only used once every 7 to 12 months, for example, adding those expenses to the sundry column can make more sense than having a blank line item month after month.
Usually—though not always—each sundry expense by itself is negligible. Accounting for them is still important, because even small expenses can add up over the course of a fiscal year.
All sundry expenses are added to make a net sundry expense figure, which is mentioned in the company’s income statement. This helps accountants avoid filling up the statement with small, random expenses that don’t need to be mentioned explicitly.
Sundry expenses vs. general expenses
Sundry expenses and general expenses differ in a number of ways, including:
Recording sundry expenses in accounting
Individual sundries can pile up to amount to significant sums of money. This makes it important to track and record these transactions in the expense accounts properly.
One row on your financial statement should represent the total sundry expense of the business. For statements that need to be balanced, the credit side usually contains a few keywords that explain the nature of the sundry expenses (e.g., “Office supplies and bank fees”).
Sundry expenses will reflect on the left side of the profit and loss (P&L) account. The sundry expense journal entry is shown as a credit to the cash or bank account to adjust the debit entry in the ledger account.
However, the nominal and irregular nature of sundry expenses can make tracking and recording them time-consuming. Adding up all of your sundry expenses for a significant period (a financial quarter or a year, for example) can burn a lot of your time, resources, and manpower, especially if you’re a small business.
If you believe you can help companies with recording sundry expenses, it might be worth starting an accounting business. Platforms like Upwork can also help you find the best accounting jobs to propel your career forward.
Record and track of your expenses the right way
Unlike in-house accountants, freelance accounting services can be hired for specific tasks (like taking care of your sundry expenses). This helps your company save the time and money it would have spent on a full-fledged accounting department. Many small businesses opt for independent accountants to get quick, professional services at a reasonable price.
