Law of conservation of energy states, that energy can be neither created nor destroyed. However, it can only be converted from one form into another.
Potential energy is the energy stored within a system when at rest. Kinetic energy is the energy when a system is in motion.
For example, let us consider a pendulum of a certain mass suspended by a string. Now at the highest point of the swing all the energy is available in the form of potential energy given as:
PE = mgh -----(1)
m = mass, g = acceleration due to gravity and h = height
As the pendulum swings, it gains velocity v. At the lowest point of the swing, all the potential energy gets converted into kinetic energy given as:
KE = 1/2 mv² ----(2)
As the pendulum swings further and reaches the maximum on the other side, once again all the kinetic energy gets converted to potential energy.
Thus, the total energy = PE + KE