Cardinal Company is considering a five-year project that would require a $3,025,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 16%. The project would provide net operating income in each of five years as follows:

Sales $2,737,000

Variable expenses $1,001,000

Contribution margin $1,736,000

Fixed expenses:

Advertising, salaries, and other fixed out-of-pocket costs $610,000

Depreciation $605,000

Total fixed expenses $1,215,000

Net operating income $521,000

1. Which item(s) in the income statement shown above will not affect cash flows?

Sales

Variable expenses

Advertising, salaries, and other fixed out-of-pocket costs expenses

Depreciation expense