Activity types are used to further classify the work you are doing in a structured way, they should represent typical categories of work in your company. If defined, activity types are added as dropdown to the log work mask (resp. screens where you can log time).
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If you have defined at least one activity type, it is mandatory to choose the activity type when looging work. However, it is not mandatory to define activity types. If you are not defining activity types (or are viewing data from JIRA work logs that had been created before installing ictime), "none" will be shown as activity type for the respective entry. There will be no dropdown for activity types when logging work.
You can define as many activity types as you like.
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We recommend to use activity types like specification, design, implementation, testing, project management etc. for reporting purposes. This gives additional information on the distribution of time to the different typical activities required to resolve your tasks/do your projects.