TOPIC:

Purchased a little 1981 kz440 LTD for my goin to work bike, in the process of getting it running, while inspecting/cleaning/taking inventory of my purchase i found this wire not connected to anything & i cannot find it in the wiring diagram, does it need to be on the frame ground along with the battery ground cable? Any info is greatly appreciated. Tyson. 

Welcome to KZRider
I fixed your picture to be full size
Next time please click the insert all tab  to complete the picture install
Dave
 

the big ring terminal on the right looks like battery negative . The yellow with black stripe is probably a ground . Black with a yellow stripe is usually maybe always ground on kawasakis. There is a black yellow stripe wire just behind that wire which would be ground.   Perhaps the yellow black stripe was an extra ground installed by PO ? I see some blue tape in there so po may have been busy.

Check the Filebase here - theres a wiring diagram for 1980 440 ltd. Might be of use
 

 DO NOT GROUND IT until you know where it goes, have you tried following it back to see where it goes? I have had a quick look at the diagram and can't see a yellow with black (maybe one of the 440 guys can clarify for you) the only thing I could see was the black/yellow in the below diagram

 

On the black and white wiring diagrams, that is identified as Y/B, which is yellow with a black stripe and seems to be the negative side of the lighting system.

www.kzrider.com/filebase?task=download.send&id=175&catid=54&m=0

paired with white /blue, should be nearby in harness, for accessory circuit in headlamp area, white,blue is 12v+, yellow/bk is 12v-, shoul have another fuse container in back, near battery, colors pretty much serve same purpose between models

Wiring diagram from the KZ400.com site below.
Could be the accessory ground. one acc ground terminal w large terminal cover would be nearby and another would be at the headlight bucket.

www.kz400.com/KZ440%20Wiring%20diagrams/...0Manual_Page_279.jpg
warning: do not go into the forums there as doing so may harm your computer w malware and whatnot.

Going by that diagram it looks like there is a y/b wire that grounds to the frame along with the battery - cable

The ring terminal is probably grounded at the neg (-) battery terminal along with the fat neg battery cable. That's the way my 81 KZ650-CSR is, although the diagram is like yours.  The other end of the fat neg battery cable is grounded at the engine.