Final answer:
Depreciation expense from the Copa Cabana Resort's income statement affects the cash flow statement by being added back to net income under operating activities, as it's a non-cash expense that reduces accounting profit but not actual cash flow.
Step-by-step explanation:
The depreciation expense on the income statement of the Copa Cabana Resort, which amounts to $275,000, will not directly affect the cash flows from operating activities, but rather it will be added back to the net income in the cash flow statement. This is because depreciation is a non-cash expense and is subtracted from the net income on the income statement to calculate accounting profit. However, when we prepare the statement of cash flows, the depreciation expense is added back to the net income in the operating activities section to adjust for the fact that it did not result in an actual outflow of cash.
For example, if the net income was $1,000,000 and depreciation was $275,000, the cash provided by operating activities would be calculated as $1,000,000 plus the depreciation of $275,000, resulting in $1,275,000 of cash generated from operating activities.