Forgotten the login password at start-up. OS X Lion.

I have been a Mac owner since 1986 but have never encounter this problem.
My father who is 91 purchased an iMac in January used it once. He is now just setting it up again after he has recently moved and this will be his only computer… finally getting rid of the PC world of Bill Gates and into a real computer. However, he has forgotten the login password at start-up which was set-up at the Apple Store.
Can I reboot the machine with a CD (have one for Snow Leopard) and change administration details this way even though is running OS X Lion?
Thanks for your help in advance as for my 8 Macs in my own business (design company) I don't use login ids at machine start-up for my employees.

Thank you Frank. This looks like an easy and straightforward fix.
However, I won't know until Sunday as my father lives in Toronto (I am 2 hours away), so will have to wait until I his Mac up and running. Then back into the world of the internet, email, Skype and all that good stuff for him.

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For Snow Leopard and earlier
     Mac OS X 10.6- If you forget your administrator password
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Forgotten the login password at start-up. OS X Lion.

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