This paper explores the persistence of accruals and accrual anomaly over a firm’s life cycle. Our empirical results show that: (1) the persistence of the accrual component of earnings is lower than that of cash flows for growing and declining firms and is greater for mature firms (2) stock market fails to properly reflect the impact of accruals and cash flows on the future earnings over different stages of life cycles. (3) The trading strategies based on different firm life cycles and accrual anomaly generate abnormal positive one-year-ahead returns. Finally, we find that the returns acquired based on both life cycle and accrual anomaly will exceed that based on accrual anomaly only.