In flow networks, may source/sink have incoming/outgoing edges?
Yes, it's possible. 

My source is 'Graph Theory and its Applications', 2nd ed, by Gross &amp; Yellen, page 540, question 13.1.8: 


  Some authors define an s-t network such that the source s must have indegree 0 and t must have outdegree 0. Describe how a network whose source and sink do not satisfy these additional requirements can be transformed by graphical operations into one whose source and sink do meet such requirements. 


However, it doesn't give the construction, I can only think that it would be by adding a supersource and a supersink, as you'd usually do with multiple (though standard) sources and sinks, to 'soak up the leakage'. I am not sure though.