The correct answer is option 4 - Neither 1 nor 2.

Let`s dissect each statement to understand why it is incorrect.

Statement 1: Early Buddhist literature is generally composed of the canonical text.

This statement is incorrect. While it is true that early Buddhist literature includes the canonical text, it is not limited to it. Early Buddhist literature also includes other types of texts such as commentaries, sub-commentaries, and Abhidhamma texts. Therefore, the statement is too narrow in its scope.

Statement 2: The Buddhist schools classify their canonical literature as only the Pitakas.

This statement is incorrect. The Buddhist schools do classify their literature as Pitakas, but the Pitakas are not the only classification. The Pitakas consist of three baskets or collections: the Vinaya Pitaka (rules for monastic discipline), the Sutta Pitaka (discourses attributed to the Buddha), and the Abhidhamma Pitaka (philosophical and psychological analysis). However, there are other texts outside of the Pitakas that are considered canonical in different Buddhist traditions. Therefore, the statement is too restrictive and does not capture the full extent of canonical literature.

In conclusion, neither statement 1 nor statement 2 is correct.