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
(D) is the correct choice!
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.
your statement : "Q1 becomes 1 if its prev value and current Q0 differs (EXOR)." is wrong i guess as q1 becomes 1 if complement of its prev value and current Qo differs
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