Concept:
Oxidative phosphorylation is the final stage of aerobic respiration and occurs on the inner mitochondrial membrane. During this process, electrons released from NADH and FADH$_2$ pass through a series of electron carriers known as the Electron Transport Chain (ETC). The energy released is used to produce ATP, while oxygen acts as the terminal (final) electron acceptor.
Step 1: Understand the Electron Transport Chain.
Electrons produced during glycolysis and the Krebs cycle are carried by NADH and FADH$_2$ to the Electron Transport Chain.
\[
\boxed{\text{NADH/FADH}_2
\rightarrow
\text{ETC}
\rightarrow
O_2}
\]
As electrons move through the ETC, energy is released for ATP synthesis.
Step 2: Role of oxygen.
At the end of the Electron Transport Chain, oxygen accepts electrons and combines with hydrogen ions.
\[
O_2+4e^-+4H^+
\longrightarrow
2H_2O
\]
Thus, oxygen is reduced to water.
Step 3: Eliminate incorrect options.
• NAD$^{+}$ accepts electrons earlier in respiration but is not the final electron acceptor.
• FAD also acts as an electron carrier.
• ATP is the product of oxidative phosphorylation.
• Oxygen is the terminal electron acceptor.
Final Answer:
\[
\boxed{Option (A) is correct
\]