2. Investors invest their funds in entities at their own will, with the expectation of
obtaining uncertain future cash flows. When investors make decisions based on
predictions of uncertain results, they need information regarding how the entity
invests the funds and the results actually achieved from those investments.
Management is basically required to disclose such information. The objective of
financial reporting is to measure and disclose the position of the entity’s
investments1 and the results of those investments as part of the disclosure system
that assists investors in making decisions.