This document describes the construction and working principles of an AC transformer. It consists of laminated iron cores with two coils - a primary coil and secondary coil - wound around the core but insulated from each other. When an alternating current is passed through the primary coil, it induces an alternating voltage in the secondary coil via mutual induction. The ratio of the number of turns in the secondary coil to the primary coil determines the ratio of the output voltage to the input voltage. Energy losses occur in transformers due to resistive heating of the coils and hysteresis in the iron core.