Final answer:
The Cost of Goods Sold (COGS) is necessary to prepare an income statement for a merchandising business but not for a service business. The merchandise balance and the current account balance relate to the values of goods and national economic transactions, respectively.
Step-by-step explanation:
To prepare an income statement for a merchandising business, distinct from a service business, the key piece of information that is required is the Cost of Goods Sold (COGS). This figure represents the direct costs attributable to the production of the goods sold by a company and is calculated as beginning inventory plus the cost of goods purchased during the period minus ending inventory. While sales revenue and operating expenses are necessary for both types of businesses, and a service business might have service fees, COGS is specific to a business that sells goods rather than services.
Calculating the merchandise balance involves determining the value of goods that can be sold by the company, which may also include calculating inventory. The current account balance is the difference between a nation's savings and its investment. It consists of the trade balance (the difference between the value of exports and imports of goods and services), net primary income or factor income (earnings on foreign investments minus payments made to foreign investors) and net cash transfers, that have taken place over a specific period of time.