Step 1: Think of the root zone as a bucket that needs filling to field capacity. Storage efficiency is only a concern when water is scarce or slow to soak in, because otherwise you can just keep irrigating until the bucket fills; this matches Statement (I).
Step 2: Now think about what happens once the bucket is already full: any extra water poured in beyond that point drains past the root zone or runs off the surface instead of being usefully stored, so the fraction of applied water that is usefully stored (the application efficiency) must go down as more water is applied. This confirms Statement (II).
\[\boxed{\text{Both Statement (I) and Statement (II) are correct}}\]