Fact: If you break magnetic lines of flux with a conductor an electrical current will be induced in the conductor . The intensity of this is a factor of the number of lines of flux and the number of turns in a coiled conductor.
And for the most part, many of the same principals apply for all power generators
The Basic Structure Of The CS Generator

U1 is always power line 1
U2 is always power line 2
The Bridge between U 4 and U3 is the Neutral power line.
In this configuration there is 220Vac between U1 and U2 and 1/2 the generators rated output at 110Vac between U1 and neutral and U2 and neutral
The Coil to the left of F1 And F2 is the rotating field or "rotor" it is fed with DC current through two sliprings with two carbon brushes per slipring. Most sets only use one. The coil between Z1 and Z2 is called the harmonic coil. This produces around 90Vac and sends that to a rectifier to make direct current for the fields. The harmonic coil acts as a current transformer giving a crude form of voltage stabilization (or auto transformer ) If is the way it is wired then the resistor may not be needed and is omitted on some units. These units are manufactured to produce 60hz at 1800rpm and 50hz at around 1500rpm. (50hz is common throughout most of Asia) The coil marked as K1 and K2 is a booster coil for 50Hz running. (It is marked inaccurately as the indicator coil) With the lower rpm the field harmonic voltage would be low and thus the output voltage. When applied to make 50Hz this coil is put in series to increase the voltage.
Start up: These units have a slight bit of residual magnetism in the rotating field. , meaning without power applied the rotor is slightly magnetic. This magnetism is used to start the generator to working. This is accomplished as the rotor starts to turn a small amount of AC power is induced in the harmonic coil and is converted to DC power and is sent to the fields thus raising the voltage in the harmonic and so on till needed output is achieved
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Problem Solving: Now if you went out and paid lots of money for a brand name powerplant and the lights just went out for the second time on a dark and stormy night. What are you going to do? Are you going to be able to fix all that electronics and plastic. It looks like a trip to the service center for your generator but that won't help on that night when you need to keep the lights on. The beauty of these generators is their SIMPLICITY. There are only a few things that can go wrong and most of these are easily fixed by keeping a few inexpensive "Radio Shack" parts on hand. DON'T Get me wrong Yanan units are built to last a life time. The lights may never go out a second time because these are built like a tank.
A problem happens. Now what. well check the simple stuff first I there a plug un plugged. Did the belt break or is there a fuse blown? Baring the obvious we must go deeper. These checks should be made with the unit not running.
1: Check the slip rings are the brushes not making contact or are worn out? -Replace and or adjust brushes until proper contact is achieved
2: Remove the brushes and with an ohm meter (digital or other wise) check the resistance of the field between the slip rings ( this should be done when you first get the unit and it should be stamped on the unit for such an occasion) If it reads open or high resistance. Look for any broken wires on the coils and make needed repairs. Worst case you can take it to a motor shop.
3:Check the condition if the diodes in the rectifier a test light and a car battery works well for this remember a diode is a one-way valve for electricity