Partner's current accounts are transferred to respective _____ partner's accounts.

Capital

The correct answer is Option (2) → Capital

When partners maintain their capital under the Fixed Capital Method, they open two accounts:

1. Capital Account: Shows only fixed capital, additional capital, or permanent withdrawals.

2. Current Account: Records all other transactions like interest on capital, salary, share of profit/loss, drawings, and interest on drawings.

At the end of the accounting period, or upon the reconstitution (e.g., admission, retirement) or dissolution of the firm, the balance of the Current Account is transferred to the respective Capital Account to determine the final amount due to or from the partner. This effectively closes the Current Account.