I have a number of operating expenses which are billable to my client. When inputting these I marked them as billable and subsequently raised and invoice which has now been paid.

When initially inputting the expenses they were paid through the petty cash account.

Now, when I run the P&L report these expenses are not being posted under operating expenses, but being added to the Sales under Operating Income. This is obviously affecting the profit as it includeds these expenses.

How should these be posted to reflect this is a cost, rather than a sales item?>