Is it true squats make your butt bigger?

This depends on how much protein you eat, your gender and genetics.

The squat is the king of all leg exercises, and will give a firmer, better shaped butt. Remember that the butt is pure muscle, and it is used to move the whole leg backwards (imagine the opposite of a straight-leg forward kick). If you are a woman, and want a better butt, do not hesitate to squat big, because it is the best way to achieve the glutes you are looking for. Women do not have the required testosterone to have gigantic muscles like bodybuilders, so do not fear. However, proper form is crucial to prevent leg damage. Ask a professional trainer to help you with this (if he tells you to get on a machine he is probably a bad trainer, and if he tells you to get on a leg curl he should be fired). I suggest you do squats with handweights rather than barbells for safety reasons.

Now the squat is a muscle building/toning exercise. If you are overweight, there is fat accumalated in the butt. This will have to go, via proper fitness dieting and cardiovascular exercise. (the only way to burn fat. situps do not burn fat) You can further work the butt during cardio by elevating the treadmill you are using.