Kap is broken, can't install plugins as the Discover panel can't fetch a list. I've been debugging it for a couple of hours and I was able to get it to fetch the plugins list, then install kap-soundflower (installed it manually as it didn't show up on the list of plugins) for the system sound to be recorded but it's not recording any sound, it only records the microphone. I'll see what I can do with the available code but I don't plan on spending too much time on it. This project has been abandoned for a while now, the last release was in October 2022 although there are some devs tinkering with the code, no idea if a new version will be released.
Thank you for your comment. It's unfortunate that Kap's development has been discontinued. The Soundflower extension had issues even at the time of creating this RU-vid video, which is why I recommended using Background Music as an alternative.
The output video doesnt appear to have audio even if I have Background Music as my microphone. Do I have to export it first for the audio to be audible?
Apologies for the delayed response. The audio should be audible during the preview. However to troubleshoot try to export video first. If there's no audio, ensure microphone access is allowed for both Background Music and your screen recording software (e.g., Kap) in System Settings > Privacy & Security > Microphone.