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In this session, we discuss repurchase agreements (repos). A repo is a financial transaction where one party sells an asset, such as inventory, for cash, with a simultaneous agreement to buy it back at a higher price later. For example, if I sell you an item for $100 and agree to buy it back for $106, the initial sale is essentially a loan. This mechanism is crucial for revenue recognition, as it helps clarify whether a company is truly divesting an asset or merely borrowing funds. Understanding repos is vital for accurate financial reporting and assessing the nature of financial transactions.