Concept:
This question is based on identification and interconversion of important calcium compounds such as limestone, lime, slaked lime, gypsum, and plaster of Paris.
Step 1: Identification of compounds
• X = CaCO$_3$ (limestone), used in cement manufacturing.
• Y = Ca(OH)$_2$ (slaked lime), used in Solvay process to recover NH$_3$.
• Z = CaSO$_4 \cdot \frac{1}{2}H_2O$ (Plaster of Paris), used for making casts.
Step 2: Checking each statement
• (A) Incorrect: Y (Ca(OH)$_2$) is NOT prepared by adding water to X (CaCO$_3$). It is prepared by adding water to CaO.
• (B) Correct: Ca(OH)$_2$ is used in bleaching powder preparation.
• (C) Correct: Gypsum heated at 373 K forms Plaster of Paris.
• (D) Correct: CaCO$_3$ reacts with P$_4$O$_{10}$ to form calcium phosphate.
Thus, statement (A) is incorrect.