Prepaid and Accrued Expense

Anthony.

I am still trying to understand this and I have the following question to do.

It shows this in a table form:
20x7 20x6
\$m \$m
____________________________________________________
Prepayments and deferred expenses 50.8 52.0

Assume this amount all related to insurance and that \$70 million cash was paid during the year to the insurance company. What is the insurance expense for the 20x7 financial year?
Now I believe a prepared expense is something you pay before you have incurred an obligation to pay it. Would that mean I would simply add 70 to the 50.8 and \$120.8million is the insurance expense for the year? Or am I completely off track?

As for Accrued Expense. The question is:
Coca-Cola Amatil Limited, in a recent annual report, included an amount of \$306.7 million in accrued charges (\$297.1 million in 20x5). Assume that all these accrued charges related to wages. If the wages paid during the year were \$500 million, what was the wages expense for 20x6?
And since Accrued Expense acts as a liability wouldn't that also be summing up \$306.7 & \$500 to get the answer?

I feel pretty lost, so I might not even make sense. Please help!

Triest123

VIP Member
I am still trying to understand this and I have the following question to do.

It shows this in a table form:

Now I believe a prepared expense is something you pay before you have incurred an obligation to pay it. Would that mean I would simply add 70 to the 50.8 and \$120.8million is the insurance expense for the year? Or am I completely off track?

And since Accrued Expense acts as a liability wouldn't that also be summing up \$306.7 & \$500 to get the answer?

I feel pretty lost, so I might not even make sense. Please help!
Now I believe a prepared expense is something you pay before you have incurred an obligation to pay it. Would that mean I would simply add 70 to the 50.8 and \$120.8million is the insurance expense for the year? Or am I completely off track?

=> The insurance expenses for the year 20x7 is "70m + 50.8m - 52m" = 68.8m

Accrued Expense acts as a liability wouldn't that also be summing up \$306.7 & \$500 to get the answer?

=> The wages expense for 20x6 is " 500m - 297.1m + 306.7m" = 509.6m

Anthony.

So I was sorta on track.. thanks a lot Triest123! I really appreciate your help.