Q.An audit conducted between two Annual (Periodical) Audits, typically to enable a company to declare an interim dividend or to ascertain the correct financial position of the business at a particular date, is known as:

This describes a one-off, special-purpose check carried out between two annual audits — exactly what an Interim Audit is defined as. …

Why (c) is correct: An Interim Audit is conducted for a specific purpose at some point between two annual (Periodical) audits, covering only part of the financial year — the two most common reasons named in the syllabus are enabling a company to declare an interim dividend, and ascertaining the correct position of a business at a given date (for a valuation, sale, or admission of a partner).

Why the distractors are wrong:

• (a) Continuous Audit is defined by its ongoing, repeated FREQUENCY through the year — not by a single, special-purpose engagement tied to a specific business decision like an interim dividend. …

Students sometimes pick 'Continuous Audit' here because both Continuous and Interim audits occur 'during the year' rather than only at year-end. The distinguishing feature to remember is PURPOSE and SCOPE: Interim Audit is a one-off, specific-purpose che …