In plain English
Assets are what the business has: cash, inventory, equipment, money customers owe you. Liabilities are what it owes: supplier balances, loans, lines of credit. The difference is equity.
For a resale business the balance sheet is mostly a story about inventory and payables, which is exactly what a lender wants to see.
Example
$14,000 cash + $62,000 inventory + $20,000 truck = $96,000 assets. $31,000 payables + $25,000 loan = $56,000 liabilities. Equity $40,000.
Why it matters
It answers the question a P&L cannot: is the business actually accumulating anything?
COMMON MISTAKECarrying dead inventory at full cost so the balance sheet looks stronger than the business is.