Turn the game on, when the screen with all the copyright information appears (right after the screen that says "Prepare for Combat"), press Square, X, Circle, Triangle, R1, R1, R2, R2, R1, R1. If the code has been properly entered, you will hear Shao Khan say "You'll never win". Once you've entered this code, on the cube with all the menus, go to "Kombat" and press up on the control pad. A question mark will appear on the cube. Select this menu option and you will get a debugging menu with the following options:
free play on/off smoke on/off fatality time on/off level select on/off 1 round match on/off 1 hit death
Thanks to Revolution Reader John Case III!!!