Sundry Accounts

[Simimano]

Good morning!

A sundry account is where different small or infrequent costs(expenses) that does not have an individual ledger account but are classified as a group,

Now is that like Stationary, water and electricity, Telephone bills? Or...?

Thanks!

[Elijah]

What accounts or expenses one decides to classify as "sundry" will really depend on the nature of the business. You need to ask yourself 2 questions when making this decision 1. What would the estimated monthly bill be for this particular expense? 2. What level of control will I need to exercise over this expense? Electricity and telephone bills can reach very high monetary amounts and both subject to abuse, so personally, wouldn't classify these as sundry. Most businesses dont use much stationery and this may account for less than 5% of your total expenses [this would justify been a sundry account]. Another candidate for the sundry account would be things like purchasing coffee/sugar etc.

[Simimano]

So in other words it is debatable?

Insurance should be a fixed amount though, right? And it doesn't exactly have an account of its own..Monthly premium payment?

Its a little confusing though because all the subjects on its own are debatable in that case, The questions you posted are helpful though.

Do you think insurance can be classified as Sundry?

[Elijah]

Depends what you insuring. If you insuring a cellphone - Sundry. If you insuring a machine worth millions - definitely not sundry

[Simimano]

Well It is insurance for the business. I will try and figure out which is which though, I've got an idea now, So thanks.

[Mike C]

Hi Simamano - one of the reasons why you put your various expenses into different accounts is so that you can see, at the end of the year, how much was spent on each particular item. This helps you in your budgetting and gives you a quick idea of where your big expense items lie.

When you put a whole bunch of stuff into sundries - it can build up quite quickly. At the end of the year your boss may ask you for a breakdown of Sundries. To then have to spend time separating everything can be quite a chore.

Printing and Stationery are usually kept as one account but separate from sundries.
Courier and Postage are also kept together but separate from sundries.
Insurance is usually kept separate.
Water and electricity are usually kept together as a separate item.

If your bookkeeping system is simple, you can lump stuff together. The more your business develops the more you will need to keep various items separate.

[Elijah]

If you get really technical, you will perhaps discover that there is no cost/expense that will qualify as a sundry account. as I mentioned earlier it really depends on the circumstances.

[Simimano]

Thanks for the info Mike C, But I am sitting with the total receipts in the sundry account and the total payments, I have a list of items I need to sort and decide which goes into the sundry, the rest..Well we might as well imagine that it doesn't exist. I have the amounts for both receipts and payments, they are quite high, In other words I have the end amounts but I don't know what needs to go in sundry to get there..Which is why I thought what I had mentioned in the first post would go in sundry, since they are groups not individual accounts?

Which is why..I am confused.

[Elijah]

Are you doing the books for a client or is it your own business? Is this a small/medium sized business or a large Corporation?

[Simimano]

Elijah, I am a student, This question is task related..As I am looking to further my knowledge and understand this, I have lots of accounting study material I need to complete, So I am just trying to get answers for myself to then understand everything perfectly.

The business is a store, with the costs it could be quite a large corporation, if not medium.

[CLIVE-TRIANGLE]

Thanks for the info Mike C, But I am sitting with the total receipts in the sundry account and the total payments, I have a list of items I need to sort and decide which goes into the sundry, the rest..Well we might as well imagine that it doesn't exist. I have the amounts for both receipts and payments, they are quite high, In other words I have the end amounts but I don't know what needs to go in sundry to get there..Which is why I thought what I had mentioned in the first post would go in sundry, since they are groups not individual accounts?

Which is why..I am confused.

The safest route is to identify the trivial and non-recurring.
Trivial so that they do not affect overall perception of profitability, in other words their absence would not be missed, and their presence barely noticed.
Recurring expenses, unless really insignificant, almost are never sundry, because they imply a contractual commitment.

[Simimano]

Definitely makes sense. So then trivial which is of very low importance and then non-recurring, probably won't happen again. So then there isn't much that really qualify for sundry, put that way, The basics I have listed, Can't really be done away with..since a business kinda needs electricity!

Most things imply contractual commitment, they are bound to be recurring.

[Elijah]

HI Simimano

You will find that the word Sundry is used more loosely in exams and college course works and this can be quite confusing. I know when I was studying "sundry accounts came up quite often, but in the real world it is not used much, MIKE C has given some reasons for this. The larger the business the less likely they are to use "sundry accounts". Smaller businesses that need to spend more Company resources on actually making money, and will have more non-recurring transactions than larger businesses, so these smaller businesses will make more use of sundry accounts [cost/benefit principle], in larger corporations which have stricter internal control measures, such decisions would be made by the audit committee and not the accountant.

Just keep the difference between the 2 in mind and this should reduce the confusion.

[CLIVE-TRIANGLE]

Definitely makes sense. So then trivial which is of very low importance and then non-recurring, probably won't happen again. So then there isn't much that really qualify for sundry, put that way, The basics I have listed, Can't really be done away with..since a business kinda needs electricity!

Most things imply contractual commitment, they are bound to be recurring.

1) I should have been more clear. By recurring I mean the same amount at regular intervals.

2) Trivial or not material would mean, as I said, their absence or inclusion would have no effect on a person's perception of the business, and/or when individual identification similarly has no effect on a person's perception of the business.

So, it follows then that sundry is actually more about the other stuff than the sundry expenses themselves. For example a company engaging in drilling activities out in the field would have huge fuel and maintenance expenses. They might also have an office that uses electricity. That could would be regarded as sundry in the light of the other expenses, and because they are not a core function. Rent would never be regarded as sundry because their is a contractual liability related to it, no matter how trivial.

As already pointed out by another poster, sundries have a way of accumulating and accountants often are required to analyse it.

[Simimano]

Thanks a lot for the information above. From just the short explanation that had been provided with my study material was simply not helpful since it had the definition for sundry but that is it.

I was wondering, Say a capital contribution is made by the owner of the business, He contributes R120 000, It is once off, yet quite a large amount of money, This is not a contractual commitment, So in other words it will be considered as sundry? It would probably make a dent in their capital though if the contribution was not made, but the owner could have decided not to, and the business would not have the extra R120 000, Which means in the first place the business would not have sunk if the R120 000 was not contributed. So it could be done away with?

It would explain the amount in sundries, but I could just be getting ahead of myself.