At the age of two, your child's imagination is becoming more and more active, so telling absurd stories or lies about daily life is to be expected. Children at this age cannot tell the difference between fantasy and reality yet. Your child will also have a very short memory about the events that occur in a single day. If something happened in the morning, your child will sometimes not be able to recall it. It is only obvious then that lies can develop, since your child can't remember being involved in what happened.
To deal with your child's lies, you can try playing along with the fictional scenarios and let your child see how ridiculous they are. If your child has done something wrong that they lied about, get them to help you clean up the mess, tidy, or fix up. You need to make your child feel comfortable and unafraid of telling you the truth.