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Here is a tutorial for creating data validation dropdown lists.

However, there is a shorter way to create short lists which don't need to be dynamic, such as creating a list with just two or three choices, like Yes, No and Cancel. Instead of creating a table as MS suggest in the link above you can just enter the list directly in the Source field: Yes,No,Cancel. Use the list separator your system requires (a comma for most English installations of MS Office). Avoid blanks in the list because they will be carried into the list.

Bear in mind that the father of this system is data validation, meaning to limit the values the user can enter to those which are in the list. A number of add-on features, all of them optional, are built around this idea. Speed, convenience and accuracy are incidental side effects.