I just want to echo the previous advice.
We had this problem with dd (now 5) last year in pre-school. I would get quite upset with her when she had me believing a story to be true and then at the end I realized she had fabricated the entire thing.
I started to stress to her that I would enjoy a story so much more if I knew from the beginning it was "from her imagination." I would assist her with this by prompting her. For example..
dd: My teacher told me I was the best in the class at writing all my letters. And then she let me pass out the snack and I gave each child 30 cookies.
me: Your imaginary teacher let you do that? That sounds like a great story you created in your head.
I found this worked much better than asking her if she was telling the truth (when I knew she wasn't), since sometimes she would continue the lie and that would make me more mad.
Fortunately, I think it was a phase which she has mostly outgrown. But I was quite worried at the time that I had a little liar on my hands. In retrospect, I think she would simply tell me tales she *wished* were true.
