Allowance for uncollectible accounts is another name for the allowance for doubtful accounts, the estimate a business keeps of how much of its outstanding receivables will probably never be collected. The main entry explains how the estimate is built, how write-offs are recorded and includes a worked example.
Why the account has several names
Companies and textbooks label this balance in slightly different ways: allowance for doubtful accounts, allowance for uncollectible accounts, allowance for bad debts and, in IFRS reporting, loss allowance. All describe a contra account with a credit balance that is deducted from gross accounts receivable on the balance sheet. The result is the amount the company expects to collect, shown as accounts receivable, net.
"Uncollectible" is the word many US textbooks prefer because it describes the outcome being estimated, while "doubtful" describes the uncertainty. The accounting is the same. Each period the business records bad debts expense to bring the allowance up to the required level, and when a particular customer's balance is confirmed as lost, it is written off against the allowance rather than against expense.
This approach is known as the allowance method. It differs from the direct write-off method, which records a loss only when a specific account fails and is generally not acceptable under GAAP when bad debts are material.