"Dia minum, saya makan."
Translation:He drinks, I eat.
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It's a matter of context, and of word order.
Dia could be he or she according to the context. Used as a subject pronoun.
Dia could also be used as a possessive pronoun, and means his or her, but the word order would be different.
For instance: Dia suka (pronoun + verb), means He likes or she likes, depending on the context (so both are accepted here on Duo's exercises, as there's no context).
And Kucing dia (noun + pronoun), means his cat, or her cat.
Used as a possessive pronoun, after a noun, and as a subject pronoun, when it's before a verb.
It's ambiguous but the context and the word order indicates us if it's his/her or she/he.
What exactly did you put, your complete answer? Also verify which instructions Duolingo gave you this time. The word "its" is a possessive form of it which would have something following that belongs to it. The contraction of "it is" would be "it's". If the instructions were to translate to English, which are not always the instructions, then if you put "She drinks. I eat." then it should also be correct and if it was not accepted as correct, then please report it as also correct.