Budgeted operating expenses for the current year include the expiration of insurance that was paid for in a previous period.

Question

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If insurance was paid for in a previous period, it would be considered a prepaid expense and would be recorded as an asset. As the insurance is used up, it would be expensed through the income statement in the form of operating expenses. Therefore, when the insurance expires, it would result in an increase in operating expenses for the current year.

Budgeted Operating Expenses for the Current Year Include the Expiration