Cute little LIARS (haha)
Every kiddo goes through a phase where they don't exactly tell the truth a lot of the time. The phase may last a short or long time, but they all seem to go through it. How did or would you handle this behavior?
I would say things like "Wow, that's an interesting story. Wouldn't it be interesting if that really happened?" to let them know I knew they were fibbing. I also talked with them about making sure you tell the truth so that people believe you, otherwise they won't believe what you say.