Final answer:
Prepaid expenses are not found on a multiple-step income statement; they are recorded as current assets on the balance sheet. The income statement includes Income from operations, Gross profit, and Income tax expense. Option c is correct.
Step-by-step explanation:
The item not found on a multiple-step income statement from the options provided is C) Prepaid expenses. A multiple-step income statement is a detailed financial statement that separates operating revenues and operating expenses from non-operating revenues, non-operating expenses, gains, and losses, providing a thorough overview of company financial performance.
The main components of a multiple-step income statement include A) Income from operations, which is calculated by deducting operating expenses from gross profit; B) Gross profit, which is sales revenue minus the cost of goods sold; and D) Income tax expense, which refers to the taxes a company must pay on its taxable income.
Prepaid expenses, however, are not an income statement item; they are recorded as current assets on the balance sheet and expensed over time as the benefit of the prepaid expense is realized.