What is Allowance for doubtful debts?

A reserve created in advance for receivables that are unlikely to be collected. It is calculated at the end of the reporting year on the basis of the results of the stocktaking of receivables, assessing the debtor's ability to pay for each doubtful debt, and charged to expense 9430; account 4910 is a contra account to receivables (NAS No. 21, paragraphs 217–219).