Designing a good test instrument involves specifications, test construction, validation, try-out, analysis and revision. The initial knowledge state of forty (40) tertiary students enrolled in Business Statistics course was determined and the same test instrument undergoes validation. The designed test instrument did not only reveal the baseline knowledge of the students, but also notes strengths, weakness and defects of the test instrument through the analysis of the test scores. Analysis of the test instrument revealed that it is reliable and valid. The item analysis result guided the researcher in improving the test items resulting to a better overall test. [Issue number (n4) displayed on the PDF is incorrect.]