the moral of the story

For the past few months we have made an addition to our bedtime routine. Jaden is really getting into her books. I have to say, I love it as much as she does. Some of the stories I haven't read since my childhood. She recently ran across an old classic that I was happy to see her choose. The story of Pinocchio, I thought would be good for her. It's an entertaining story with a good moral message. The other day she came over to me with a broken toy. She was unaware that I had actually saw her break it. When I asked her if she broke it she responded to me with "the ugee witch" (from The Wizard of Oz) did it. I asked her if she was telling me the truth and she said yes. I asked her again giving her another chance, she grabbed her nose and said , "My nose not growing momma" and then said it was still the ugee witch. What could I do?
I have learned that no movie, story or game is as entertaining as everyday life with a toddler.