Many thanks Satcomer,
I heard that it could have been a problem with Quicktime.
I checked the sound in Preferences before I got your advice. Yup. It was there. To be honest, I don't know what I clicked but after re-boot all was back to normal. I'm keeping your reply in my files for future use if needed.
What I don't get is how it got turned off. Mmmm.
I then had a very interesting chat with my friends via skype in Osaka... if you know what I mean. Anyway, all is well now with the mac. Take care and thanks again for your quick advice. R.