[Vast Buffalo Wing Conspiracy]

Yes, that is the quote; as I remembered, it does not say that they grow beards, only that non-dwarves cannot tell them apart due to "voice and appearance" - and "in garb if they go on a journey"! So they dress like Dwarf men; no reason why they wouldn't put on a fake beard to complete the disguise.

[HairOfTheDog]

Or they might have beards... I thought the joke was cute.