Concept:An interim dividend is an appropriation of profit, not an expense of the business.Explanation:Interim dividend is paid out of the company’s profit earned during the year.It reduces the income surplus or accumulated profit available to the company.Hence, the interim dividend paid is debited to the income surplus account and credited to the bank account.It is not an operating expense, so it should not be debited to the profit and loss account.Answer:B. debited to the income surplus account