Sundry can mean various, miscellaneous, or diverse. Sundry debtors might refer to a company’s customers who rarely make purchases on credit and the amounts they purchase are not significant.

I suspect that the term sundry was more common when bookkeeping was a manual task. In other words, prior to the low cost of computers and accounting software, a bookkeeper had to add a page to the company’s ledger book for every new customer. If a new page was added for every occasional customer, the ledger book would become unwieldly. It was more practical to have one page entitled sundry on which those occasional customers’ small transactions were entered.

With the efficiency and low cost of today’s accounting systems, I believe the need for classifying customers and accounts as sundry has been greatly reduced.

An expense is a temporary account which reduces owner’s equity or stockholders’ equity. The decrease in owner’s equity will offset the increase in the liability account.

Learn more about the Accounting Equation.

Liquidity usually refers to a company’s ability to pay its bills when they become due. Liquidity is often evaluated by comparing a company’s current assets to its current liabilities. Working capital, the current ratio, and the quick ratio are referred to as liquidity ratios or short-term solvency ratios, since [...] Continue Reading…

Pro rata is a Latin term that means in proportion. Pro rata is related to prorate, a term used in cost accounting.

To illustrate the term pro rata, let’s assume that a company’s standard costing system has an unfavorable materials price variance of $400,000. If that amount is significant, the [...] Continue Reading…

Financial accounting has its focus on the financial statements which are distributed to stockholders, lenders, financial analysts, and others outside of the company. Courses in financial accounting cover the generally accepted accounting principles which must be followed when reporting the results of a corporation’s past transactions on its balance [...] Continue Reading…