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The Correct Use of Its/It's

Its is an adjective and the possessive form of the pronoun it.

It's is a contraction (for it is or it has), that must always have an apostrophe.

Its is used as adjective. "The cat chased Its tail." [The cat chased the tail belonging to the cat.] "The bank closed Its doors." [The bank closed the doors belonging to the bank.] The adjective Its never means 'it is.'

It may be used as a pronoun, It is used to refer to that which has been previously mentioned. "The car was very fast. It had never been neaten in a race."

It may be used as a pronoun to refer to a human or non-human entity which is an animate being where the sex is unknown or irrelevant. "Someone knocked at the door, but left before I could find out who It was," "The dog appeared at the gate. Then It was gone."

It may be used as a pronoun to refer to objects. "He washed the medallion in the stream until It was clean."

It may be used as a pronoun as the subject of a third person singular verb. "It is raining out."

It may be used as a pronoun as an anticipatory subject. "Is It likely that there will be rain tomorrow?"

It may be used as a pronoun as an anticipatory subject to emphasize a therm that is not itself a subject. "It was on the fourth that the document was signed."

It may be used as a pronoun as a general condition or state of affairs. "I can't stand It any longer!"

It may be used as a pronoun to refer to a crucial situation or culmination. "This is It!" "Is that It?"

Informal. It is used to refer to something that is the most desirable. "He thinks he is really It."

It may be used as a noun. It is used to refer to a human or non-human entity which is an animate being where the sex is unknown or irrelevant.

In the game of tag: "Someone is selected who is It?"

A neutered animal: "The dog is an It."

[Idiom] With It means aware of or knowledgeable about something: "As far as computers go, I'm With It."
With It also can refer to mentally responsive or perceptive: "I just can't get With It today."

[Vernacular] It sometimes replaces there when there functions as what is called an existential. A existential use of there is when there indicates the existence of something, rather than a physical location. An example of it replacing an existential there is in the sentence, "It was nothing I could do."

In some American vernacular dialects, particularly in the South (including the Appalachian and Ozark mountains), speakers may pronounce It as "Hit," in accented positions especially at the beginning of a sentence. For example, a backwoods protagonist might say "Hit's a gonna' rain." To which the backwoods answer might be, "Then don't leave the plow out, get it in the barn." Note the replacement of the accented It at the start of the sentence with Hit. While the unaccented It in the middle of the sentence remains as It.

Some relatively isolated dialects in Great Britain and the United States have retained the use of Hit, since linguistic innovations such as the dropping of the h are often slow to reach isolated areas. But even in such places, h tends to be retained only in accented words. Nowadays, hit is fading even in the most isolated dialect communities and occurs primarily among older speakers.

The loss of h from Hit reflects a longstanding tendency among speakers of English to omit h in unaccented words, particularly pronouns, such as 'er and 'im for her and him. It is still common to hear "Rev 'er up!" in casual speech by educated persons, although "Rev her up" is meant.

Its is also used as a modifier before a noun. "The engine will not operate properly until its oil has reached proper temperature,"
.

It's is a contraction of It is or It has.

In order to determine whether to use Its or It's, simply try substituting 'it is' or 'it has.' If the substitution makes sense, use It's.

Correct::
It's going to be a sunny day. [It is going to be a sunny day.]

The surf is up and It's going to be a good day at the beach. [The surf is up and it is going to be a good day at the beach.]

It's been a long day. [It has been a long day.]

Incorrect:
The group has lost all of it's money. "The group has lost all of it is money. No!"
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