Cells always offer resistance to the flow of current through them, which is often very small. This resistance is called the internal resistance of the cell and depends on the size of the cell - the area of the plates immersed in the liquid, the distance between the plates and strength of electrolyte used in the cell.

A resistance box R with a key K_{1} is connected in parallel with the cell. The primary circuit has a standard cell, a rheostat and a one way key K. As soon as key K is closed, a current I begins to flow through the wire AB. The key K_{1} is kept open and on moving the jockey, a balance is obtained with the cell E_{1} at point, say Y_{1}. Let AY_{1} = L_{1}.

E_{1} = kL_{1}

Now key K_{1} is closed. This introduces a resistance across the cell. A current, say I_{1}, flows in the loop E_{1}RK_{1}E_{1} due to cell E. Using Ohm’s law,

I_{1} = E_{1}/(R+r)

It means that terminal potential difference V_{1} of the cell will be less than E_{1} by an amount I_{1}r.

V_{1} = I_{1}R

Potential difference V_{1} is balanced on the potentiometer wire without change in current I. Let the balance point be at point Y_{2} such that AY_{2} = L_{2}.

V_{1} = kL_{2}

E_{1}/V_{1} = L_{1}/L_{2} = (R+r)/R

**r = R(L _{1}/L_{2} - 1)**