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In this session, we explore repurchase agreements (repos). A repo is a financial transaction where one party sells an asset, like inventory, for cash—let's say $100—and simultaneously agrees to repurchase it later for a higher price, such as $106. While it appears to be a sale, it is essentially a borrowing mechanism, as the seller is obtaining cash and committing to buy back the asset. Understanding repos is crucial for revenue recognition, as it helps clarify whether a company is genuinely completing a sale or simply engaging in a financing activity. This distinction impacts financial reporting and analysis.