Yes, "thank you" is a good way to acknowledge the compliment, and it's generally taken as an agreement that the compliment is valid, and it signals that you appreciate what was said to you. You can also say "That's very kind of you" or "you're very kind" instead. Those options are a way of (kind of) returning the compliment. Those latter options might, very subtly, imply that the compliment is not actually deserved; which is a nuance that the listener may or may not infer. But in any case, if you feel that the compliment is not deserved then you might choose those latter options whether or not you wish the listener to infer anything from them. Sometimes, it's difficult to pluck up the nerve to compliment, so hearing any of the options above is far nicer than hearing "No, I'm not" or "Pssssh" or "That's not true". Those are responses that come from embarrassment or feeling uncomfortable with the compliment, and they'll discourage the other person from trying to compliment you again. :) A final option, if you really do want to signal that you don't really think that the compliment is valid, is to say, "Well, I don't think I am, but I like to hear you say it". That's usually something you'd only say to a very dear one, though.