If you put a custom function in application.rb or another controller and then try to access it from your view, you'll get the "No Method Error" similar to following:
NoMethodError in Categories#list
Showing app/views/categories/list.rhtml where line #23 raised:
undefined method `create_permalink' for #<#
The solution is to place the function as a helper function in the app/helpers/categories_helper.rb or app/helpers/application_helper.rb file.