Correct option is B
From the given statement following diagram can be drawn-

Conclusion I: All cakes being bags is a possibility.
This conclusion talks about a possible scenario, not a definite statement. Since there’s no contradiction between the two statements that would make this impossible, it is a valid possibility. So, Conclusion I follows.
Conclusion II: Some bags are cakes.
This conclusion does not follow from the statements because the information provided does not directly link bags and cakes. The statements only connect both with chocolates, but there's no direct relationship between bags and cakes.
Thus, only Conclusion I follows.
The correct answer is: (b) Only conclusion I follows.