This paper introduces a new measure of the quality of accruals and earnings, focusing on the role of accrual estimation errors. Accruals are designed to reduce timing and mismatching issues in cash flows but involve assumptions and estimates about future cash flows, which can lead to estimation errors. These errors reduce the beneficial role of accruals, making the quality of accruals and earnings decrease with the magnitude of estimation noise. The authors develop a model of working capital accruals and derive an empirical measure of accrual quality as the residual from firm-specific regressions of changes in working capital on past, present, and future operating cash flows. Two empirical applications are presented: one exploring the relationship between accrual quality and economic fundamentals, and another examining the relation between accrual quality and earnings persistence. The results show that accrual quality is negatively related to the magnitude of total accruals, the length of the operating cycle, and the standard deviation of sales, cash flows, and earnings, while it is positively related to firm size. Additionally, there is a strong positive relation between accrual quality and earnings persistence.This paper introduces a new measure of the quality of accruals and earnings, focusing on the role of accrual estimation errors. Accruals are designed to reduce timing and mismatching issues in cash flows but involve assumptions and estimates about future cash flows, which can lead to estimation errors. These errors reduce the beneficial role of accruals, making the quality of accruals and earnings decrease with the magnitude of estimation noise. The authors develop a model of working capital accruals and derive an empirical measure of accrual quality as the residual from firm-specific regressions of changes in working capital on past, present, and future operating cash flows. Two empirical applications are presented: one exploring the relationship between accrual quality and economic fundamentals, and another examining the relation between accrual quality and earnings persistence. The results show that accrual quality is negatively related to the magnitude of total accruals, the length of the operating cycle, and the standard deviation of sales, cash flows, and earnings, while it is positively related to firm size. Additionally, there is a strong positive relation between accrual quality and earnings persistence.