Which sentence uses "it's" correctly?

• A. Its a sunny day.
• B. Its' going to be fine.
• C. It's sunny outside.
• D. It's dog is barking.

Answer: (C)

The sentence tests correct use of it's (it is) versus its (possessive). The right choice uses it's as a contraction for it is: It's sunny outside. If you expand it, it reads It is sunny outside, which fits naturally and shows proper punctuation.

The other options go astray in different ways. Its a sunny day leaves out the apostrophe, treating it as a possessive determin­er when the intended meaning is a contraction. Its' going to be fine uses an apostrophe in the wrong place, which isn’t a standard form in English. Its dog is barking misuses the possessive form and also omits needed words (like a or another determiner) for grammatical sense.