Final answer:
Karen Lamont is focusing her assumptions on creating forecasts for both the income statement, showing profitability, and the balance sheet, indicating her business's financial health, for her new business's first year.
Step-by-step explanation:
Karen Lamont is primarily concerned with the income statement and the balance sheet when making assumptions for forecasting her new business's financial performance for the first year. An income statement details a company's revenues and expenses over a specific period, showcasing the profitability. The balance sheet, an accounting tool, lists a company's assets, liabilities, and net worth at a specific point in time, indicating its financial health and stability.
For Karen, assuming she has taken the steps to understand her potential revenues, cost of goods sold, operating expenses, and so on, she would be directly affecting her income statement forecast. Additionally, assumptions regarding startup costs, capital investments, inventory, accounts receivable and payable, and other such figures would relate to the makeup of her projected balance sheet.
Given that the question specifies that Karen wants to forecast both the income statement and the balance sheet, it is clear that her assumptions must cater to both of these financial statements.