I have the same problem.  I purchase materials for customers that I later bill them for using the Billable checkbox at the time of categorizing the expense.  I categorize the expense as Cost of Goods Sold.  That billable expense is then invoiced to the customer.  The revenue for the billable expense is being reported as Income on P&L but the expense is not showing in the Cost of Goods Sold section of the P&L which in turn inflates my profit.  Is there a way to fix this without having to stop using the billable expense option?  It is a great way to be able to track these expenses by customer without making it a manual process for invoicing.