"What time is it" is normally how you ask the question which when you do the exercise picking words leaves one short of the word "It" to make the last sentence. Still "What time is it? Four o'clock" should have been accepted.
I got the version of this with the multiple-choice tiles, and the tiles divide "o'clock" in the wrong place. It's an abbreviation of "of the clock", so the apostrophe should be with the "o", not with the "clock". #grammarpedantry