Item classification

how do I classify items in my items list? 

I have Product A that I buy from a vendor and sell to a customer.

If I set product A as an income item (I sell it) I get a warning when I try and create a P.O. for the vendor. (Item is associated with an income account)

Item A is sold and bought. ??? Is item A a COGS? If so, it can't appear on a customer invoice