Before an adjusting entry is made to recognize the cost of expired insurance for the period.Prepaid Insurance and Insurance Expense are both overstated. True or False True

False.<br /><br />Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance is overstated because it still includes amounts that should have been expensed. However, Insurance Expense is understated because the expense for the expired portion has not yet been recorded. Therefore, only Prepaid Insurance is overstated, and Insurance Expense is understated.