You need to add your image to the app/assets/images folder and then you would use the <%= image_tag() %> on one of your templates.
This generates an image tag for use once in a file. However if you want a CSS background image the gem sass-rails is very helpful which you should already have in your Gemfile.
Create a new file called custom.css.scss in your app/assets/stylesheets folder and put in the following:
body { background-image: image-url("preston.jpg"); }
It should automatically generate the CSS (check it with your browser's inspector):