How do I create graphics in Adobe Photoshop to be used for billboard?

If you have a photo (or a raster image), you can easily print it at 20dpi for a billboard size print, and it will still look good. Low dpi is acceptable for very large prints because the natural viewing distance is much greater than for regular sized photo prints.

Let's take an example, say something like 320" x 120" (26.5' x 10')

Simply multiply each dimension in inches by the dpi to get the number of pixels. So at 20dpi that would be 6400px x 2400px, which is around 15 megapixels.

If you have text or line art such as logos, it would be better to use vector image editing software, like Adobe Illustrator. You can combine raster images like a photograph, and overlay vector images in Illustrator. You could also use InDesign in the same way.

Obviously when producing photographs for billboard displays you need to make sure the image is tack sharp, because if it isn't, it will be very noticeable when enlarging the images to such an extent. Try to avoid resampling images to make them large enough, as it usually has a detrimental effect.

My advice is not to ask us for advice! Ask the billboard company. They are the ones who are going to print it. You will need to know what they want as a final deliverable before you do anything anyhow. I'm going to bet that they can also give you insight into needed resolution, etc.

And I agree with BK that Illustrator or InDesign is your best bet unless you have nothing but images.