We have spent a little time describing the roles of accounting in society. The accounting system periodically produces a measure of profitability (Net Income) and states the company's resources, obligations, and owners' residual as of the end of the year (Assets, Liabilities. Shareholders' Equity). Required: 1. Accounting seems useful in valuation. It affects how people value a company. What is your intuition about what happens when people expect earnings of, say, $3 per share, but the earnings reported is $2.50 per share. 2. Accounting seems useful in contracts. It's a relatively independent measure of the status of the company. Why do creditors (for example) wish to have independent measures of the state of the company after they have become lenders? We have spent a little time describing the roles of accounting in society. The accounting system periodically produces a measure of profitability (Net Income) and states the company's resources, obligations, and owners' residual as of the end of the year (Assets, Liabilities. Shareholders' Equity). Required: 1. Accounting seems useful in valuation. It affects how people value a company. What is your intuition about what happens when people expect earnings of, say, $3 per share, but the earnings reported is $2.50 per share. 2. Accounting seems useful in contracts. It's a relatively independent measure of the status of the company. Why do creditors (for example) wish to have independent measures of the state of the company after they have become lenders