This article explores issues involved in using assessments as a means of defining standards and encouraging efforts to meet them. It compares the European examination system with the present American testing system. It also considers issues that must be faced in defining learning domains in ways that do not encourage narrowly focused training on specific assessment items. Performance assessment is designed for a different set of social functions than is traditional American testing, and is grounded in different epistemological assumptions. A great deal of practical work is going into the design of new assessments for the new needs of education, but there is relatively little reflection on the theoretical aspects of the development of new assessments. Performance assessment cannot develop on solid ground without more explicit theories of situated cognition than are now available. A cognitive theory of accomplishment is needed for new forms of assessment. (SLD)