Thanks. Yes, this is exactly what I have discovered.

If I use items the income goes to the correct account but I have to manually adjust the amount on the invoice (not practical for us) or fudge the PST when entering bills (possible).

If I use expenses the PST pulls correctly but the income goes back to COGS and I'd have to manually adjust if I want an accurate P&L.

I don't think it's practical NOT to mark things as billable-I'd either have to spend the time to type in each bill as a separate line on the invoice, OR spend the time typing it when clients ask because the invoice is not clear enough for them. I could copy/paste from Excel to the invoice but it it's still adding a lot of opportunities for error.

As you suggested I am in the construction industry and some clients want to check every single expense so it's easiest for everyone if the invoices are very clear.

How important is it that total income and total COGS are accurate on a P&L? Gross Profit and Net Income are still correct. Is it only for our own budgeting and planning purposes that we need those numbers? Is it worth entering a monthly journal entry to transfer reimbursed COGS to the income account? Are there other implications to making entries like that?

Thanks for your help.