When the telephone rings a 60 Hz AC signal, a proportional magnetic field is generated on the telephone line. Due to electromagnetic induction, coil L1 absorbs these magnetic fields and generates a proportional voltage at both ends of L1. It will bias transistor Q1 to conduction, which causes transistor Q2, Q3 and Q4 conduction, buzzer to sound and LED to light.Switch S1 is used as the ON/OFF switch.