Combine the dry ingredients: Combine the flour, baking powder, sugar, cinnamon and salt in a large bowl.
Whisk together the wet ingredients: In a separate smaller bowl, whisk together the water, oil, vanilla extract and egg yolk (or buttermilk)
Combine the wet and dry ingredients: Add the wet ingredients to the bowl with the dry ingredients and mix well with a spoon to form a smooth dough.
Shape the dough: Roll the dough into about 25 to 30 small balls. To avoid cracks during frying, ensure that the rolled dough is as smooth as possible. See note 5
Fry the donuts: Heat 2 inches (5 cm) oil over medium high in a heavy based small to medium sized pot, wok or small but deep-frying pan (skillet) to 370°F (185°C) to or until it takes 20 seconds for a small cube of bread to turn golden. See note 6
Using a slotted spoon, drop a few shaped donuts gently into the oil. Do not overcrowd the pan. See note 7
The donuts will expand as they fry. Fry for about 4 minutes, turning the donuts with a spoon every minute or so. See note 8
Remove the donuts from the oil: Remove the fried from the oil and transfer to a plate lined with paper towels. Leave the donuts on the paper towel for about 10 seconds and then roll them immediately in the bowl with the cinnamon sugar. The sugar adheres much better to the warm donuts.
Homemade donuts are best eaten warm and on the same day it has been prepared.