Kids and cursing

Is it really that bad or wrong when kids curse? For example my sister in law and her husband curse all the time. And of course they're 5 year old daughter picks up on it. She will jokingly with her dad say his ass stinks and laugh. Or when they're playing she sometimes used the word shit. And also I remember one time she had accidently ran into a wall, and she turned around and looked at me and said "mother fuckk my nose" and I burst out laughing. I noticed she never curses anyone out directly, never uses it to hurt or be rude to someone. (Except her dad when they play around) Just apart of her vocabulary.