To display Post Categories and Tags

Under Appearance
Choose Widgets
Click on the arrow on Below Right Sidebar
From the middle Left Click on Categories and drag into box
Enter a Title
Choose Show as dropdown
Show post counts
Show hierarchy
Save

Do the same for Tags
From the middle Left Click onTag Cloud and drag into same box
Enter a Title
Choose Show as dropdown
Show post counts
Show hierarchy
Save

The tags and categories will display on your site like this: