On the dissolution of a firm, creditors is transferred to:

Realisation Account

The correct answer is option 3- Realisation Account.

On the dissolution of a firm, creditors is transferred to Realisation Account.

Creditors are third party debts so they are transferred to realisation account. 

When the firm is dissolved, its books of account are to be closed and the profit or loss arising on realisation of its assets and discharge of liabilities is to be computed. For this purpose, a Realisation Account is prepared to ascertain the net effect (profit or loss) of realisation of assets and payment of liabilities which may be is transferred to partner’s capital accounts in their profit sharing ratio. Hence, all assets (other than cash in hand bank balance and fictitious assets, if any), and all external liabilities are transferred to this account. It also records the sale of assets, and payment of liabilities and realisation expenses. The balance in this account is termed as profit or loss on realisation which is transferred to partners’ capital accounts in the profit sharing ratio. After transferring liabilities like creditors and bills payables in the realisation account, in the absence of any information regarding the payment, such liabilities are treated as fully paid.