Cakes never seem to level properly when baking, unless you invest in strange baking implements (that only work with certain pans). Rather than fiddling with serrated bread knives, or investing in a uni-tasker in the kitchen that Alton Brown would disapprove of, you can use dental floss to trim cake domes or split cake layers.
What you'll need: waxed dental floss. Unless you want to add weird flavors to your delicious baked goods, I suggest using unflavored floss.
Also, you will need a (baked) cake!
Select a piece of dental floss at least 9 inches longer than the diameter of the cake you are cutting (e.g., for a 9-inch round cake, about 18 inches). Wrap the ends around your index fingers and position the floss at the level you want to cut through the cake. (In the picture below, I wanted so slice the frosted dome off the cupcake.)
Pull the floss through the cake, using steady, even pressure. Keep the floss level.
Finish pulling the floss through the cake, and you're done!
In the picture below, the cut is a little slanted, because I didn't hold the floss perfectly level. If this is a problem, you can tie one end of the string to some kind of implement (chopstick, pencil, etc.) and only move the other end. Also, cakes without items baked into them cut more cleanly, because there is nothing for the floss to get caught on (like the shredded carrots in the carrot cake cupcake).