Preheat the oven to 350 degrees. Spray an 8x8 pan with nonstick cooking spray, and dust lightly with 2 tbsp flour, tapping out the excess.
Combine the flour, sugar, baking powder, and salt in a mixing bowl. Add the milk, butter and vanilla, and beat for 3 minutes with a hand mixer until creamy.
Here's the fun, Fourth of July part—stir in the sprinkles! As with many cake recipes, you'll want to treat the batter gently so your cake isn't too tough.
Pour the batter into the pan and bake in the center of the oven for 30 minutes, or until a toothpick inserted into the middle comes out clean.
Cool in the pan for 10 minutes, then remove and allow to cool completely on a wire rack.
In a separate bowl, mix the butter, vanilla, and powdered sugar with a hand mixer until crumbly.
Carefully add the milk a tablespoon at a time, until the consistency is smooth.
Once the cake is cool, frost the cake and top with the extra sprinkles.