How a microphone works

When the sound wave strikes the black diaphragm cone, causing the diaphragm cone to vibrate backwards and forwards. 

The diaphragm cone is attached to a wire coil, so as the diaphragm cone moves forwards and backwards, so does the coil. 

This will cause the coil to cut the magnetic field lines setting up an alternating induced potential difference across the ends of the coil, due to the generator effect. 

If the coil is part of a complete circuit, then an alternating current will flow.