1. A service company's net income can be expected to increase in which of the following scenarios involving an overall shortening of the operating cycle?

a. inventory cost savings are generated from decreasing the inventory turnover rate

b. gross profit rate improvements due to less average number of days to sell inventory

c. net sales increases due to less average number of days to collect accounts receivable

d. none of the above

2. The cost of delivering merchandise to the customer is:

a. Part of cost of goods sold.

b. Used in the calculation of net sales.

c. An operating expense.

d. A reduction of gross profit.

3. The cost of the transportation of purchased inventory:

a. Is a current period expense

b. Increases income.

c. Becomes part of the cost of inventory.

d. Reduces the sales price of the inventory