Mistakes using apostrophes are common. The apostrophe is used under two circumstances: To indicate possession and to replace a missing letter.

Possession

Use an apostrophe to indicate possession. For example:

Sally's cat is black and white.

John's motorcycle is broken.

Plurals and Possession

To indicate possession when a word ends in an "s," end the word with an apostrophe:

The cats' food bowl was full.

The girls' racing cars were ready.

Cass' day had come.

Where the word is already plural, the apostrophe is treated in the same way as in singular word:

The sheep's paddock was muddy.

The women's goal was to have fun.

Replacing Letters

Use an apostrophe to replace missing letters:

It's a tough life. (It is a tough life.)

That's a nice car. (That is a nice car.)

Warning

The apostrophe is never used to create plurals.

Wrong: D.A.'s are paid well.

Right: D.A.s are paid well.

Wrong: Six egg's for $2.

Right: Six eggs for $2.

You can find an advanced discussion of the apostrophe at Grammar Book.

Fun Fact

Because it is so commonly wrong on grocery signs, a misused apostrophe is often known as the "grocer's apostrophe."