Format?

I would like to set up a new file at the same size of a piece of paper (8 1/2 by 11) but everytime I insert those numbers for width and height (in inches) for a new doc what pops up on PS is not a document that is 8 1/2 by 11. It is much smaller. IS there a way to do this so that all the margins are equal to that of a WORD doc?

I also need to move that file to a word document and I want it to be one big picture.