Explanation:

- Statement 1: The State Finance Commission reviews the financial position of the local governments in the state.

- This is correct because it evaluates how local bodies are funded and suggests improvements.

- Statement 2: It reviews the distribution of revenue between rural and urban local governments.

- This is also correct as the commission recommends how revenue should be allocated fairly between different types of local bodies.

- Option 1: 1 only

- This option is incorrect because Statement 2 is also correct.

- Option 2: 2 only

- This option is incorrect because Statement 1 is also correct.

- Option 3: Both 1 and 2

- This is the correct option as both statements 1 and 2 are true.

- Option 4: Neither 1 nor 2

- This option is incorrect because both statements are correct.