In calculating operating activities, which of the following should be subtracted?

In the context of calculating cash flows from operating activities, interest and taxes paid are indeed subtracted from operating cash flows. This is because these payments are considered cash outflows related to the core operations of the business. Operating activities encompass the primary revenue-generating activities of a company, and interest and tax obligations typically arise as a result of those operations.

When deriving cash flows from operating activities using the direct method, the cash received from customers is added to the total inflows, while the cash paid to suppliers, employees, and for other operating expenses, including interest and taxes, are subtracted as outflows. This provides a clearer picture of the cash generated or consumed through typical business operations.

In contrast, other options like cash collected from customers represent inflows and would be added rather than subtracted. Changes in accounts payable indicate changes in liabilities related to purchases on credit but do not represent direct cash flows. Proceeds from the sale of equipment are cash inflows related to investing activities, not operating activities, and would therefore not be involved in this subtraction process.