During the carbon cycle, organic matter can be used in multiple ways by different organisms, although, this chemical compound also can be buried underground and converted into peat, coal, oil, or gas deposits. This is possible due to organisms can store this material in their structures to grow, and eventually, when they decay, for example, when a tree or an animal dies, it begins to form part of the soil in which they were before. This is the reason why currently we can extract oil from underground sinks, because of those biggest organisms that lived millions of years ago, such as the dinosaurs and ancient plants.
Having this clear, we can say that the correct answer is the first one.
We can see the carbon cycle in this licensed image.