Diagram for Reference

It is always necessary for engineers and technicians to test AC/DC mains voltages and continuity for any given circuit during breakdowns, the above mentioned circuit can be used as and sought of tester and can also check the continuity for you. all one has to do is that to touch the two probes at the required terminal of either live or an dead circuit

The unique design of the tester allows the circuit to work in both AC and DC without any mode selector switch.

When the probes A and B are short circuited voltage pin 1 goes a little below the threshold of the Schmitt trigger due to the voltage divider action of the resistor R1, R2 and VR1 This disables the gate of pin1 and due to this the transistor T2 goes into saturation while the transistor T1 is cut off therefore the green LED glows while the red segment goes off and the display will now glow as “C” 

VR1 is a miniature preset which is to be calibrated before use its calibrations are fairy simple, keep both the probes A and B short circuited and the preset VR1 at its minimum value and slowly increase the resistance value of the VR1 till the red LED glows OFF and only green LED glows 

Source - http://www.electronguide.com/circuits_pages/Digital_AC-DC_Voltage.html