As a consulting company we bill and make a profit on our time but occasionally we incur expesnes related to a job, which we bill to the client. My questions are
If the expenses are rebilled at cost should they be posted as an offset to the expense account, thereby reducing net expense to zero?
If they are rebilled at a profit should I follow the same process except that I will now end up with negative expenses (unless expenses from other sources more than offset the credit.)
Or should we bill the recovery as revenue and the underlying expenses as Cost of sales?
Would your answers be different if the profit was more than just incidental in relation to the profit earned from supply of services?