Final answer:
Before adjustment, the unearned revenue from guide services would lead to an increase in assets (accounts receivable) and an increase in equity (revenue) in Sierra Corporation's financial statements. The correct answer is D) Increase in Assets, Increase in Equity.
Step-by-step explanation:
The impact on the financial statements before adjustment, given that Sierra Corporation performed guide services for $200 that were not billed to clients before October 31, can be understood through the accrual basis of accounting principles. Since the revenue has been earned in October but not yet billed, it is considered unearned revenue. According to accrual accounting, this creates an account receivable, which is an asset. So, there would be an increase in assets due to the accounts receivable. At the same time, the earned revenue increases the owner's equity, because the company has provided a service and has the right to receive money. As per the double-entry bookkeeping system, this translates to an increase in equity owing to the recognition of revenue. The correct answer is D) Increase in Assets, Increase in Equity as it reflects the earning of revenue that has not yet been billed.