subcontractor question

@contractor9080 

"The items we used to create the PO are connected to a income account."

Items used to create POs should be linked to an expense account generally unless they are inventory items.  The account you select under the "Account" pull-down menu on an item will be debited when purchased.  That means that it will be recorded as an increase in an expense or a reduction in income (as you're seeing).  The bottom-line is the same (they both reduce net income) but, as you've alluded to, it should be recorded as an expense.  Also, no income reduction or expense increase should be hitting your P&L when you create a PO because a PO is a non-posting transaction and doesn't affect your accounting.  If you're seeing income or expense changes when creating a PO, then something else is going on - it's not the PO that's causing it.

"My conclusion is that COGS only shows up if we sell the item. "

You're correct.  COGS is an account that records the cost of items when sold, hence cost of goods sold.  COGS is generally only used for inventory items because its purpose it to match the cost of the item sold to the same accounting period as its associated revenue.  That doesn't prevent users from booking costs to COGS when purchased for items other than inventory items, it's just not technically proper accounting. 

"Since the item is not invoiced to the customer directly it is not shown in the expense account of the project. to fix this I am thinking I will need to change all the entered bill pos from the items tab to the expense tab and assign them to a job."

Items other than inventory items should show as expenses for the project when added to a bill if that item is assigned to an expense account. You shouldn't have to enter them on the Expense tab.