Since the introduction of Web features into Illustrator, there’s been some confusion about the Knife tool. Many users select the Slice tool thinking it’s the Knife. After all, it sure looks like a knife, but that’s where the resemblance ends. The Slice tool is used to cut up an Illustrator file for use on a website. The Knife tool, which is easily recognized by its sawtooth edge, is hidden in the Tool palette under the Scissors tool. Press on the Scissors to reveal and select the Knife tool.
Using the Knife is a lot easier than finding it. Select an object that has a Fill and Stroke, then switch to the Knife tool. Click and drag the tool over the selected object to cut the object with surgical precision into two totally separate closed paths. The objects can then be selected and moved separately and are in no way related or grouped. But with the way the objects fit back together along the cut line, you’d think they were made for each other
Tip provided by Jeff Witchel, Certified Adobe® Training Provider.