Correct Answer: Both are true.

: The accrual and cash flow components of current earnings have different implications for the assessment of future earnings. While both components contribute to current earnings, current earnings performance is less likely to persist if it is attributable primarily to the accrual component of earnings as opposed to the cash flow component. This is because accruals are less likely to recur in future periods' earnings. High earnings performance that is attributable to the cash flow component of earnings is more likely to persist than high earnings performance that is attributable to the accrual component of earnings.