FSA Q correct, question, following, exceeding, statements

PieMan

Here is the question. I pose my question after.

Which of the following statements about operating income and operating cash flow are correct or incorrect?

Statement #1:
If operating income is growing faster than operating cash flow over the long-term, the firm may be recognizing revenue too soon or delaying the recognition of expense.

Statement #2:
Operating cash flow exceeding operating income is sustainable over the long-term.



A) Both are correct.

B) Both are incorrect.

C) Only one is correct.


Your answer: B was incorrect. The correct answer was C) Only one is correct.

Statement #1 is correct. If operating income and operating cash flow are growing at different rates over the long-term, the firm may be engaging in earnings manipulation. Statement #2 is incorrect. Over the long-term, operating cash flow will eventually decline without the support of operating income.

I almost chose C, but if a firm recognizes revenue early or delays expenses, doesn't this even out over the long-term? I can see if they said a firm was including non-operating income above the line or something, but I feel like CF and earnings should even out over the long-term if the only issue is rev. recognition or expenses... Help please.