What if part of your business is incurring expenses for the client. For instance, we get paid to buy things for our customers. We get paid a fee for this, not a markup on the stuff we buy. So we may get paid $1,000 to buy $30,000 of goods for the customer and most of the time we get a deposit that we use the for the buying. Our bank account then looks like us getting paid $20,000 then we spent $30,000 and then we get paid $11,000. But if we mark the $30,000 as an expense, a cost of goods sold expense for instance, then all $31,000 as income, it is going to make our profit margin seem terrible. When in reality we made $1,000 for a service. In this case wouldn't it be best to debit the purchases to an income account and then have an offsetting account right next that gets credited for the "reimbursement"?
... View more