They are the most difficult to accept or to deal with and require extremely sensitive handling. But before we term a particular child a liar, we must be sure that the child is actually lying and it is not just his overactive imagination at work. Very often the child could have thought that a particular thing had happened even though this is not actually the case, but this does not necessarily mean that he is lying. He could have even had a realistic dream that he believes to be true like a robber coming into his bedroom or maybe even a dog or a cat. To us these might seem like little lies, but to him, with his limited experiences and different perceptions might be very real indeed.
Most children normally express what they feel very genuinely.
It may seem like an overly exaggerated story or even a lie and then the child gets misunderstood and branded a liar. Be careful here because this would only serve to stunt his entire emotional development. If you can not show him trust then he will ultimately lose confidence in himself and grow into a highly complexed individual. Once this mistrust sets in, things only get worse when the parents ask his siblings or friends to verify what the child may have said. Or else some parents tend to put their child down in public saying that no one should believe his exaggerated stories.