In current cost accounting (CCA), the cost of sales is calculated based on the cost of replacing the goods at the time they are sold. The important principle is that current costs must be matched with current revenues.

Sales are current revenues and, out of the costs, all operating expenses are current costs. In the case of inventories, certain adjustments must be made, which is referred to as the cost of sales adjustment (COSA).

Cost of Sales Adjustment Formula

COSA can be calculated using the following formula:
Cost of Sales Adjustment (COSA) Formula

  • C = Historical cost of closing stock
  • O = Historical cost of opening stock
  • Ia = Average Index number
  • Ic = Index number appropriate to closing stock
  • Io = Index number appropriate to opening stock


Calculate the cost of sales adjustment (COSA) using the following information:

Historical Cost Index Number
$ $
Opening Stock 52,000 100
Purchases 220,000 110
Total Goods 272,000
Less: Closing Stock 72,000 120
Cost of Sales 200,000


To solve this, start with the COSA formula mentioned above and substitute in the correct values from the table above. In particular:

COSA = (72,000 – 52,000) – 110 (72,000 / 120 – 52,000 / 120)
= 20,000 – 110 (600 – 520)
= 20,000 – 8,800

Another approach is to calculate COSA as follows:
Current Cost of Sales (COSA) Example
COSA = Current cost of sales – Historical cost of sales
= 2,11,200 – 2,00,000
= $11,200

Contact the experts

Getting the hang of accounting computations does not require you to merely memorize formulas. Understanding is key! Get help from the experts by connecting to a financial advisor in Brentwood, TN or scan through our financial advisor page to connect with one in your area.

Frequently Asked Questions

What is the Cost of Sales Adjustment (COSA)?

The cosa is an adjustment to the cost of sales to reflect the current costs of inventory at the time of sale. This adjustment is necessary because historical costs do not always match current costs.

Why must a COSA be made?

A cosa must be made to ensure that the cost of sales is calculated based on the current cost of inventory. This ensures that the match between current revenues and costs is accurate.

What is the big idea behind COSA?

The big idea behind the cost of sales adjustment (cosa) is ensuring that all costs are calculated based on current costs. Only in this way can accurate revenue-cost matches be made to determine profitability.

What are the components of COSA?

The components of cosa include the historical cost of closing stock, the historical cost of opening stock, and the average index number. Each of these components is necessary to accurately calculate the current cost of sales.

What formula is used to calculate cosa?

The formula used to calculate cosa is: cosa = (historical cost of closing stock – historical cost of opening stock) average index number index number appropriate to closing stock index number appropriate to opening stock

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.