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In this session, repurchase agreements (repos) are explained. A repo involves one party selling an asset, like inventory, for cash, with a pre-arranged agreement to buy it back at a higher price later. For example, one might sell an item for $100 and agree to repurchase it for $106. This process isn't a standard sale; instead, it functions as a borrowing transaction, where the seller effectively receives a loan. Understanding repos is crucial for accurate revenue recognition, as it helps determine if a company is involved in such agreements rather than typical sales transactions.