Decoration
Walk into your "Animal Crossing" home, pull up your inventory, hover the cursor over the cake and select "Place in room." When you put the cake down in your home, you will see strawberries, candles and a name card decorating the cake. You can put the cake down anywhere you like -- on a table, on a shelf or on the floor -- and use the cake as a decoration. The cake will never rot and you can put it away whenever you redecorate. When you have the cake on display, your house will get a boost of 1,111 "Happy Room Academy" points. The more points you have, the greater your chance of winning the monthly HRA contest.
Blow it Out
You can interact with your cake whenever you use it as a decoration. Guide your player character to stand in front of the cake, press "A" and your character will blow out the candles. The flames only retreat temporarily, but you can interact with your cake by blowing out its candles as often as you like.
Eat It
Eat the cake and watch your player character experience a happy animation. The character will sprout flowers briefly from his head to indicate his joy. To eat, open your inventory and drag the cake over your player character's face. There is no benefit to eating the cake other than seeing the animation. Your player character does not have to eat and does not gain points by eating. If you eat the cake, you won't be able to get another one until your player character's next birthday.
Give it to Wendell
Wendell the walrus artist gives the player character presents in exchange for food. If you opt to give Wendell your birthday cake, he will give you a self-portrait of himself in return. You can hang the portrait in your home as a decoration. However, paintings give only 151 HRA points. You will earn more HRA points decorating your home with the cake. However, if you play for more than one year and get two birthday cakes, you may want to trade the second cake to get the rare self-portrait item.