Distance Learning is playing a very important role in providing education to the students of rural and remote areas. In distance learning, students learning feedback and assessment require time and cost using manual communication. In the emerging technologies, mobile assessment (m-assessment) has gained momentum because of its potential as a useful electronic assessment tool available on widely used mobile devices. The mobile phone usage in Pakistan over the last ten year has been increased incredibly but the potential of SMS technology in assessment activity has not been fully explored. This study focused on mobile usage for formative assessment in distance learning environment of AIOU. The key objectives of this study are a) To develop a prototype m-assessment software application which is capable to conduct formative assessment activities on SMS b) To test the application on AIOU students c) To conduct a student satisfaction survey to test the technology acceptance model for m-assessment. The application was developed in PHP using SMS web-service on backend to conduct quiz. The survey method was applied to test the technology acceptance model for m-assessment. It was tested on 277 selected students of Intermediate, Bachelor and Master’s level enrolled in English and IT courses at AIOU. Technology acceptance survey indicated that the majority (87%) of the respondents were satisfied with mobile assessment method. Around 90% of the respondents regarded it as one of the quickest assessment methods. Out of 277 students only 101 (36%) students responded on SMS which indicated that formal student training is required before implementing such system at AIOU.