Final answer:
The false statement is that publicly held companies may choose between a statement of cash flows or a statement of changes in financial position. The FASB mandated the statement of cash flows in the late 1980s, and it focuses specifically on cash movements.
Step-by-step explanation:
The statement which is false is: a) publicly held companies may choose to prepare either a statement of cash flows or a statement of changes in financial position. Publicly held companies are required by the Financial Accounting Standards Board (FASB) to prepare a statement of cash flows. The statement of cash flows provides detailed information regarding a company's cash inflows and outflows over a certain period. This mandate was established in the late 1980s, specifically in 1987 with the release of FASB Statement No. 95, now codified as ASC 230.
It has since replaced the older statement of changes in financial position. Understanding how to prepare and analyze a statement of cash flows is indeed essential for financial analysts, as it enables them to better assess the liquidity and financial flexibility of a company. The statement of cash flow is not simply prepared by calculating changes in all balance sheet accounts; it specifically focuses on changes in cash and cash equivalents, segregating cash flows into operating, investing, and financing activities.