Potential energy is the energy possessed by an object due to its position. The gravitational potential energy is directly proportional to the height at which the object is situated. As the height decreases the potential energy of the object decreases.
Kinetic energy is the energy possessed by an object due to its motion. The kinetic energy is proportional to the square of the velocity of an object. As the velocity of the object increases the kinetic energy of the object also increases.
As the apple starts to fall the height of the apple starts to decrease. And due to the acceleration due to gravity acting on the apple, its velocity starts to increase. From the law of conservation of energy, the energy can neither be created nor be destroyed but can be converted from one form to another.
Thus as the apple falls, its potential energy decreases and the kinetic energy increases as the potential energy lost is converted into its kinetic energy.
