We describe the development and validation of a three-tiered diagnostic test of the water cycle (DTWC) and use it to evaluate the impact of prior learning experiences on undergraduates' misconceptions. While most approaches to instrument validation take a positivist perspective using singular criteria such as reliability and fit with a measurement model, we extend this to a multi-tiered approach which supports multiple interpretations. Using a sample of 130 undergraduate students from two colleges, we utilize the Rasch model to place students and items along traditional one-, two-, and three-tiered scales as well as a misconceptions scale. In the three-tiered and misconceptions scales, high confidence was indicative of mastery. In the latter scale, a "misconception" was defined as mastery of an incorrect concept. We found that integrating confidence into mastery did little to change item functioning; however, three-tiered usage resulted in higher reliability and lower student ability estimates than two-tiered usage. The misconceptions scale showed high efficacy in predicting items on which particular students were likely to express misconceptions, and revealed several tenacious misconceptions that all students were likely to express regardless of ability. Previous coursework on the water cycle did little to change the prevalence of undergraduates' misconceptions.