Prepare the Cake:
Make your favorite cake recipe into cupcakes, or bake the batter in ovenproof cups. If you opt for baking in cups, be sure they're well greased and that the cakes have cooked completely (slide knife in center, if blade comes up clean it's typically ready) before you remove them from the oven.
If you're using a cupcake pan, spray the entire top of the pan with non-stick spray. Fill each cupcake pan almost to the top with the cake batter. Tiny cupcakes just will not do for this project.
After the cake has cooled, remove them from their containers. If your cakes have puffed up, flatten the tops by slicing off the bump with a sharp knife. You'll probably have no trouble finding volunteers to nibble on those bumps. Another option is to leave the bumps and use piped frosting to build up the sides of the cake to match the height of the center.
Ready to Decorate:
Frost the sides of each cake with a color of your choice. White or pastel colored frosting show off the decorations on the sides of the cupcakes especially well.
Place each cake on a pretty or plain saucer. Decorate the cake's sides to resemble a teacup. For very young children, small candies pressed into the frosting will be easiest. Older kids can handle tubes of decorating gel. Make a cup handle for each cake from a piece of gummy worm, string licorice, or a (non-edible) chenille stick. Press the two ends of the handle into the side of each cake.
Anyone for Tea?
Create a ring of frosting around the top edge of the cupcake. If you don't have a piping tube, buy a tube of frosting, or make one from a plastic bag. The piped rim will give the cupcake additional height and hold in the "tea." Fill the cup with "tea" by covering the top of the cake with caramel sauce (found in the ice cream toppings section of the supermarket). Don't warm the sauce because it'll spill over. Place the cakes in the refrigerator for a half hour to set the caramel. If they're not going to be served immediately, cover each cake with plastic wrap after the caramel has set.
A Treat to Give
If you'd like to give teacup cakes as gifts, have your children decorate small paper plates with markers and stickers instead of giving away your saucers. Cover the plates tightly with clear plastic wrap to protect the cake. Wrap each cupcake and saucer with another piece of clear plastic wrap pulled up around it and tied with a pretty ribbon.