The purpose of recording warranty liability at the end of each year is to:

Recording warranty liability at the end of each year is primarily about matching expenses with related revenues. This principle, known as the matching principle, ensures that the costs associated with warranties are recorded in the same period as the related sales revenue. When a company sells a product with a warranty, it has an obligation to repair or replace defective products. By estimating and recording warranty liabilities, the company recognizes the future expenses it expects to incur and aligns those costs with the sales revenue generated from the products sold.

This matching helps provide a more accurate financial picture of the company's profitability in a given period, as it reflects all associated costs with the products sold, including those that may not be paid out until future periods. This is crucial for stakeholders who rely on the financial statements to make informed decisions.