Consider the following circuit:
The flip-flops are positive edge triggered D FFs. Each state is designated as a two-bit string $Q_0Q_1$. Let the initial state be 00. The state transition sequence is
Clearly Q0 alternates in every clk cycle as Q0' is fed as input and it is D flipflop.
Q1 becomes 1 if its prev value and current Q0 differs (EXOR).
So, the sequence of transitions will be 00 -> 11 -> 01 -> 10 -> 00 (D) choice.
This might help..