Partners' current accounts are transferred to respective Partners' _____ Accounts.

Capital

The correct answer is Option (1) → Capital

At the time of final settlement (dissolution) of a firm, all balances related to partners must be brought together in their Capital Accounts.

• The Current Account balances (whether debit or credit) are transferred to the respective partners’ Capital Accounts to determine the final amount due to or from each partner.

• After this transfer, only Capital Accounts and the Bank Account remain open for final settlement.