Perspectives on testing and grading are considered; and strategies, reference materials, and sample test items are presented. Attention is directed to specific impacts of testing and grading on students and teachers, purposes of testing and grading, and common complaints of students and teachers. Extra activities proposed for the teacher include discussing with colleagues the testing/grading purposes and keeping a record of student complaints regarding grading and tests. Several prerequisites are identified as important for test development: subject matter expertise; well-developed instructional objectives; mastery of written communication; an understanding of the individuals for whom the test is intended; and knowledge of the principles and procedures of item writing/test construction. A 15-step strategy for planning, implementing, and evaluating classroom tests is presented, based on test construction principles. Extra learning activities are proposed for the teacher to provide additional information about testing principles and practices, practice with various aspects of test construction, and critique of the teacher's tests and testing procedures. Several purposes of grading (reporting; decision making; and stimulating, directing, and rewarding students), and limitations of grading and norm- and criterion-referenced tests are considered. A bibliography; information on score distributions; examples of types of test items; and articles on test reliability and validity, tables of specifications, and norm- and criterion-referenced tests are appended. (SW)