When cash flow and accrual earnings diverge persistently, the cash flow is usually right. Three quick checks before you act: 1. Name the mechanism in plain English: Accrual accounting gives management discretion. Cash flow is harder to fake because it tracks actual money entering and leaving the business. 2. Say why it matters for behavior or portfolio decisions: A persistent gap where earnings lead and cash flow lags is a classic prelude to restatement or write-down. 3. Set the review question: Before sizing up, identify whether the edge comes from cash flow, volatility, timing or balance-sheet structure. Market translation: If a company reports record net income but operating cash flow has been flat or negative for multiple quarters, something in the accrual chain is likely being stretched. Failure mode: The mistake is treating occasional divergence as alarming. The signal is in persistence and magnitude, not in single-quarter noise. The point is not to memorize the label. The point is to know what variable is actually doing the work.