Presented below is the operating activities section of a statement of cash flows for 2014:

Operating activities:

Cash collected from customers $550,000

Cash payments for merchandise (150,000)

Cash payments for operating expenses (275,000)

Net cash inflow from operating activities $125,000

Which method of preparing the operating activities section was used?

a. The direct method.

b. The indirect method.

c. Cannot be determined without further information.

d. Either method