Preheat your oven to 350°F (175°C) and prepare a 9-inch round baking pan by greasing lightly and dusting with flour.

In a mixing bowl, combine the applesauce, granulated sugar, eggs, and vegetable oil. Whisk until smooth for about 2-3 minutes.

In a separate bowl, whisk together the all-purpose flour, baking powder, and cinnamon. Gradually fold into the wet ingredients until just combined.

Pour the batter into the prepared baking pan and bake for 30-35 minutes until golden brown and a toothpick comes out clean.

Allow the cake to cool in the pan for 10 minutes, then transfer to a wire rack to cool completely.

In a clean bowl, beat the cream cheese until smooth. Gradually add the powdered sugar and cinnamon, mixing until silky. Add in vanilla extract if using.

Once the cake is completely cool, spread the frosting evenly over the top. Optionally sprinkle with a pinch of cinnamon for decoration.

Slice the cake and serve. Enjoy this heartwarming dessert with your favorite beverage!