Identify the correct sentence from the options below.

Correct option is D

(a) "It's" is incorrect because "it's" is a contraction for "it is," whereas "its" (without an apostrophe) is the correct possessive pronoun.
(b) "Chassed" is incorrect as it is a misspelling of "chased."
(c) "lis' tail" is incorrect as "lis'" is not a valid word in English.
(d) "The cat chased its tail." is correct because "its" correctly shows possession, and "chased" is the proper verb form.
Thus, the correct answer is (d) The cat chased its tail.