bismillaharrahmanarrahim
 The merit of truth and honesty was an important teaching of the Prophet Muhammad (pbuh).  In a hadith we read the Prophet Muhammad (pbuh) stating the following:

Bukhari Volume 8, Book 73, Number 116: Narrated 'Abdullah: The Prophet said, "Truthfulness leads to righteousness, and righteousness leads to Paradise. And a man keeps on telling the truth until he becomes a truthful person. Falsehood leads to Al-Fajur (i.e. wickedness, evil-doing), and Al-Fajur (wickedness) leads to the (Hell) Fire, and a man may keep on telling lies till he is written before Allah, a liar."

So here we read about how truth leads to righteousness, and how eventually this righteousness leads to paradise, hence being truthful is linked with one going to paradise! As the prophet also correctly stated, truthfulness leads to one becoming righteous, because a truthful person will keep his word, you will be able to trust that person, and as anyone knows, when there is trust, then you have a very strong backbone for a strong noble person, as well as a strong society.

After the Prophet Muhammad (PBUH) stressed the importance of truth, he contrasted this with the issue of lying, and as we read the prophet linked this sinful act with leading to hell! Hence one can easily conclude the grave sin of lying, and why it should not be done, and rather why one should be truthful.

We read in another hadith:

Bukhari Volume 9, Book 92, Number 381: Narrated Hudhaifa: Allah's Apostle said to us, "Honesty descended from the Heavens and settled in the roots of the hearts of men (faithful believers), and then the Quran was revealed and the people read the Quran, (and learnt it from it) and also learnt it from the Sunna." Both Quran and Sunna strengthened their (the faithful believers') honesty. (See Hadith No. 208)

Once again we see the important merit of truth, and how the Quran and Sunnah strengthens the honesty of the Muslim, hence the Quran and Sunnah is linked to truth and honesty, so this should embody itself in the Muslim, the Muslim therefore must be truthful and honesty. The Prophet Muhammad (pbuh) also taught the Muslims the following:

Bukhari Volume 9, Book 86, Number 94: Narrated 'Abdullah bin 'Umar: A man mentioned to the Prophet that he had always been cheated in bargains. The Prophet said, "Whenever you do bargain, say, 'No cheating.'"

So the prophet taught the Muslims to not cheat in their dealings and bargaining’s, now if a Muslim is not allowed to cheat during a bargain, then this means a Muslim cannot cheat and deceive in other affairs, and so he must always be truthful and honest in whatever he is doing.

In two other hadiths we continue to read about how the Prophet Muhammad (pbuh) taught his people to be truthful:

Bukhari Volume 1, Book 1, Number 6: Narrated 'Abdullah bin 'Abbas Heraclius said, "Bring him (Abu Sufyan) close to me and make his companions stand behind him." Abu Sufyan added, Heraclius told his translator to tell my companions that he wanted to put some questions to me regarding that man (The Prophet) and that if I told a lie they (my companions) should contradict me." Abu Sufyan added, "By Allah! Had I not been afraid of my companions labeling me a liar, I would not have spoken the truth about the Prophet. The first question he asked me about him was: 'What is his family status amongst you?' I replied, 'He belongs to a good (noble) family amongst us.' Heraclius further asked, 'Has anybody amongst you ever claimed the same (i.e. to be a Prophet) before him?' I replied, 'No.' He said, 'Was anybody amongst his ancestors a king?' I replied, 'No.' Heraclius asked, 'Do the nobles or the poor follow him?' I replied, 'It is the poor who follow him.' He said, 'Are his followers increasing decreasing (day by day)?' I replied, 'They are increasing.' He then asked, 'Does anybody amongst those who embrace his religion become displeased and renounce the religion afterwards?' I replied, 'No.' Heraclius said, 'Have you ever accused him of telling lies before his claim (to be a Prophet)?' I replied, 'No. 'Heraclius said, 'Does he break his promises?' I replied, 'No. We are at truce with him but we do not know what he will do in it.' I could not find opportunity to say anything against him except that. Heraclius asked, 'Have you ever had a war with him?' I replied, 'Yes.' Then he said, 'What was the outcome of the battles?' I replied, 'Sometimes he was victorious and sometimes we.' Heraclius said, 'What does he order you to do?' I said, 'He tells us to worship Allah and Allah alone and not to worship anything along with Him, and to renounce all that our ancestors had said. He orders us to pray, to speak the truth, to be chaste and to keep good relations with our Kith and kin.'

And in another hadith:

O King, we were an uncivilized people, worshipping idols, eating corpses, committing abominations, breaking natural ties, treating guests badly, and our strong devoured our weak. Thus we were until God sent us an apostle whose lineage, truth, trustworthiness, and clemency we know. He summoned us to acknowledge God's unity and to worship and to renounce the stones and images which we and our fathers formerly worshipped. He commanded us to speak the truth, be faithful to our engagements, mindful of the ties of kinship and kindly hospitality, and to refrain from crimes and bloodshed. He forbade us to commit abominations and to speak lies, and to devour the property of orphans, to vilify chaste women. (Ibn Ishaque)

Last but not least the Prophet Muhammad (pbuh) also described the qualities and traits of of what would make one a hypocrite:

1. Whenever he speaks, he tells a lie.

So as one can read, the traits of a hypocrite is a person who lies, breaks his promises, and is dishonest in his dealings. So therefore the Prophet Muhammad (pbuh) was clearly speaking against these acts, after all, nobody wants to be a hypocrite, and on top of that, Islam has a very low view of hypocrites. Hence a good Muslim is one who does not lie, one who does not break his promises, and one who is honest in his dealings!

So in conclusion, the Prophet Muhammad (pbuh) taught the Muslims to be honest, truthful, and that this would lead to paradise.

And Allah Knows Best!