Concept:Interim dividend is a distribution of profit, not an expense of the business.
Explanation:An interim dividend is paid from the profits earned during the year.
It is treated as an appropriation, meaning it reduces the amount available for retained earnings.
Hence, it is debited to the Profit and Loss Appropriation Account or Income Surplus Account, not to the Profit and Loss Account.
Since dividend is not an expense, it is never debited to the Profit and Loss Account as a charge.
Also, it is not income, so it is never credited to any account.
Answer:A. debited to the Income Surplus Account/ Profit and Loss Appropriation Account