I agree with several others that there are much easier and much more elegant ways to achieve this. The code in the correct answer would not get past me if I were doing code reviews!
I don't agree with the people who complain about the change from "Column1" to "Col1". If you look at the question and the list of possible answers, it's immediately obvious that this is a mixup on the part of the question's author, not a deliberate ploy to test if people would notice the name change. If the latter were the case, there must have been at least one answer that somehow reflects this.
I won't say that this question is a good question for the reason mentioned in the first paragraph, but it's definitely a question where there can be no discussion over what the correct answer should be. In spite of the error in the column name, there are three answer options that are obviously wrong, and one answer option that is obviously right (once the column name is corrected).
PS: There's even one more way to achieve the intended change:
UPDATE TOP(1) Table1
SET Column1 = 0
WHERE Column1 = 1;
Since row order in a relational table does not matter and there are no other columns in the table to identify rows, the end result of this query will be a table with 7 single-column rows, four of them with the value 0 and three with the value 1. Just like the result of all the other options presented in this topic.