<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

                        Commission File Number: 33-89476

                      COMMONWEALTH INCOME & GROWTH FUND II
             (Exact name of registrant as specified in its charter)

         Pennsylvania                                  23-2795120
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

                          470 John Young Way Suite 300
                                 Exton, PA 19341
          (Address, including zip code, of principal executive offices)

                                 (610) 594-9600
               (Registrant's telephone number including area code)

     Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (ii) has been subject to such filing
requirements for the past 90 days: YES [X] NO [ ]

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12c-2 of the Act): YES [ ] NO [X]

<PAGE>

                                    FORM 10-Q
                                 MARCH 31, 2005

                                TABLE OF CONTENTS

                                     PART I
Item 1.  Condensed Financial Statements                                        3
Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            11
Item 3.  Quantitative and Qualitative Disclosures About Market Risk           14
Item 4.  Controls and Procedures                                              14

                                  PART II
Item 1.  Legal Proceedings                                                    15
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.         15
Item 3.  Defaults Upon Senior Securities                                      15
Item 4.  Submission of Matters to a Vote of Securities Holders                15
Item 5.  Other Information                                                    15
Item 6.  Index to Exhibits

         Signatures

         Certifications

                                                                               2
<PAGE>

                      COMMONWEALTH INCOME & GROWTH FUND II
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                           MARCH 31,     DECEMBER 31,
                                                             2005            2004
                                                         -------------   -------------
                                                          (UNAUDITED)
<S>                                                      <C>             <C>
ASSETS

Cash and cash equivalents                                $      12,230   $       1,085
Lease income receivable                                          8,305           9,478
Net investment in direct financing leases                       58,899          86,487
Other receivables - affiliated partnerships                      6,608          16,792
Deposits                                                            25              25
                                                         -------------   -------------
                                                                86,067         113,867
                                                         -------------   -------------

Computer equipment, at cost                                  2,734,602       2,850,669
Accumulated depreciation                                    (2,472,462)     (2,460,366)
                                                         -------------   -------------
                                                               262,140         390,303
                                                         -------------   -------------

Equipment acquisition costs and deferred expenses, net           1,129           2,601
Accounts receivable, Commonwealth Capital Corp                  12,783          16,100
                                                         -------------   -------------
                                                                13,912          18,701
                                                         -------------   -------------

TOTAL ASSETS                                             $     362,119   $     522,871
                                                         =============   =============

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Accounts payable                                         $      39,529   $      51,515
Accounts payable - General Partner                             107,340          79,488
Accounts payable - Commonwealth Capital Corp                    73,322          42,499
Unearned lease income                                           92,996          94,576
Notes payable                                                   83,583         115,967
                                                         -------------   -------------
TOTAL LIABILITIES                                              396,770         384,045
                                                         -------------   -------------

PARTNERS' CAPITAL
General partner                                                  1,000           1,000
Limited partners                                               (35,651)        137,826
                                                         -------------   -------------
TOTAL PARTNERS' CAPITAL                                        (34,651)        138,826
                                                         -------------   -------------

TOTAL LIABILITIES AND PARTNERS' CAPITAL                  $     362,119   $     522,871
                                                         =============   =============
</TABLE>

            see accompanying notes to condensed financial statements

                                                                               3

<PAGE>

                      COMMONWEALTH INCOME & GROWTH FUND II
                       CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                         -----------------------------
                                                             2005            2004
                                                         -------------   -------------
                                                                  (unaudited)
<S>                                                      <C>             <C>
INCOME
Lease                                                    $      28,792   $     232,774
Interest and other                                                   -             137
                                                         -------------   -------------

TOTAL INCOME                                                    28,792         232,911
                                                         -------------   -------------

EXPENSES
Operating, excluding depreciation                               83,491         111,440
Equipment management fee - General Partner                         300          11,639
Interest                                                         2,093          11,027
Depreciation                                                   109,294         191,730
Amortization of equipment
 acquisition costs and deferred expenses                         1,473          12,223
Loss on sale of computer equipment                               5,618           9,891
                                                         -------------   -------------
TOTAL EXPENSES                                                 202,269         347,950
                                                         -------------   -------------

NET (LOSS)                                               $    (173,477)  $    (115,039)
                                                         =============   =============

NET (LOSS) PER EQUIVALENT LIMITED
 PARTNERSHIP UNIT                                        $       (0.38)  $       (0.25)
                                                         =============   =============

WEIGHTED AVERAGE NUMBER OF EQUIVALENT LIMITED
 PARTNERSHIP UNITS OUTSTANDING DURING THE PERIOD               460,067         460,067
                                                         =============   =============
</TABLE>

            see accompanying notes to condensed financial statements

                                                                               4
<PAGE>

                      COMMONWEALTH INCOME & GROWTH FUND II
               CONDENSED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)

<TABLE>
<CAPTION>
                                                          FOR THE THREE MONTHS ENDED MARCH 31, 2005
                                                                        (UNAUDITED)
                                                     ---------------------------------------------------
                                                     GENERAL   LIMITED
                                                     PARTNER   PARTNER   GENERAL    LIMITED
                                                      UNITS     UNITS    PARTNER    PARTNER      TOTAL
                                                     -------   -------   -------   ---------   ---------
<S>                                                       <C>  <C>       <C>       <C>         <C>
PARTNERS' CAPITAL (DEFICIT) - DECEMBER 31, 2004           50   460,067   $ 1,000   $ 137,826   $ 138,826
 Net (loss)                                                                         (173,477)   (173,477)
                                                     -------   -------   -------   ---------   ---------
PARTNERS' CAPITAL (DEFICIT) - MARCH 31, 2005              50   460,067   $ 1,000   $ (35,651)  $ (34,651)
                                                     =======   =======   =======   =========   =========
</TABLE>

            see accompanying notes to condensed financial statements

                                                                               5
<PAGE>

                              COMMONWEALTH INCOME & GROWTH FUND II
                                CONDENSED STATEMENTS OF CASH FLOW
                       FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                               2005             2004
                                                          --------------   --------------
                                                                    (UNAUDITED)
<S>                                                       <C>              <C>
NET CASH (USED IN) OPERATING ACTIVITIES                           (5,421)         (40,569)
                                                          --------------   --------------
INVESTING ACTIVITIES:

Net proceeds from the sale of computer equipment                  13,249           53,394
                                                          --------------   --------------
NET CASH PROVIDED BY INVESTING ACTIVITIES                         13,249           53,394
                                                          --------------   --------------
FINANCING ACTIVITIES:
Distributions to partners                                              -         (115,440)
Other receivables-Commonwealth Capital Corp                        3,317           70,834
                                                          --------------   --------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                3,317          (44,606)
                                                          --------------   --------------
Net increase (decrease) in cash and equivalents                   11,145          (31,781)
Cash and cash equivalents, beginning of period                     1,085           37,758
                                                          --------------   --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                  $       12,230   $        5,977
                                                          ==============   ==============
</TABLE>

            see accompanying notes to condensed financial statements

                                                                               6
<PAGE>

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

1.   BUSINESS           Commonwealth Income & Growth Fund II (the "Partnership")
                        is a limited partnership organized in the Commonwealth
                        of Pennsylvania to acquire, own and lease various types
                        of computer peripheral equipment and other similar
                        capital equipment, which will be leased primarily to
                        U.S. corporations and institutions. Commonwealth Capital
                        Corp ("CCC"), on behalf of the Partnership and other
                        affiliated partnerships, acquires computer equipment
                        subject to associated debt obligations and lease
                        agreements and allocates a participation in the cost,
                        debt and lease revenue to the various partnerships based
                        on certain risk factors. The Partnership's General
                        Partner is Commonwealth Income & Growth Fund, Inc. (the
                        "General Partner"), a Pennsylvania corporation which is
                        an indirect wholly owned subsidiary of CCC. CCC is a
                        member of the Investment Program Association (IPA),
                        Financial Planning Association (FPA), and the Equipment
                        Leasing Association (ELA). Approximately ten years after
                        the commencement of operations, the Partnership intends
                        to sell or otherwise dispose of all of its computer
                        equipment, make final distributions to partners, and to
                        dissolve. Unless sooner terminated, the Partnership will
                        continue until December 31, 2006.

2.   SUMMARY OF         BASIS OF PRESENTATION
     SIGNIFICANT
     ACCOUNTING         The financial information presented as of any date other
     POLICIES           than December 31 has been prepared from the books and
                        records without audit. Financial information as of
                        December 31 has been derived from the audited financial
                        statements of the Partnership, but does not include all
                        disclosures required by generally accepted accounting
                        principles. In the opinion of management, all
                        adjustments, consisting only of normal recurring
                        adjustments, necessary for a fair presentation of the
                        financial information for the periods indicated have
                        been included. For further information regarding the
                        Partnership's accounting policies, refer to the
                        financial statements and related notes included in the
                        Partnership's annual report on Form 10-K for the year
                        ended December 31, 2004. Operating results for the
                        three-month period ended March 31, 2005 are not
                        necessarily indicative of financial results that may be
                        expected for the full year ended December 31, 2005.

                        LONG-LIVED ASSETS

                        The Partnership evaluates its long-lived assets when
                        events or circumstances indicate that the value of the
                        asset may not be recoverable. The Partnership determines
                        whether an impairment exists by estimating the
                        undiscounted cash flows to be generated by each asset.
                        If the estimated undiscounted cash flows are less than
                        the carrying value of the asset then an impairment
                        exists. The amount of the impairment is determined based
                        on the difference between the carrying value and the
                        fair value. The fair value is determined based on
                        estimated discounted cash flows to be generated by the
                        asset. The Partnership determined that no impairment had
                        occurred during the three months ended March 31, 2005.

                                                                               7
<PAGE>

                        Depreciation on computer equipment for financial
                        statement purposes is based on the straight-line method
                        over estimated useful lives of four years.

                        NET INCOME (LOSS) PER EQUIVALENT LIMITED PARTNERSHIP
                        UNIT

                        The net income (loss) per equivalent limited partnership
                        unit is computed based upon net income (loss) allocated
                        to the limited partners and the weighted average number
                        of equivalent units outstanding during the period.

3.   NET INVESTMENT IN  The following lists the components of the net investment
     DIRECT FINANCING   in direct financing  leases as of March 31, 2005 and
     LEASES             December 31, 2004:

<TABLE>
<CAPTION>
                                                                           MARCH 31,      December 31,
                                                                             2005             2004
                                                                        --------------   --------------
                        <S>                                             <C>              <C>
                        Minimum lease payments receivable
                                                                        $       82,790   $      103,927
                        Less: Unearned revenue                                  23,891           17,440
                                                                        --------------   --------------
                        Net investment in direct financing leases       $       58,899   $       86,487
                                                                        ==============   ==============
</TABLE>

                        The following is a schedule of future minimum rentals on
                        noncancellable direct financing leases at March 31, 2005

                                                                        Amount
                                                                     -----------
                        Nine Months Remaining December 31, 2005      $    56,142
                        Year Ended December 31, 2006                      26,648
                                                                     -----------
                                                                     $    82,790
                                                                     ===========

4.   COMPUTER           The Partnership is the lessor of equipment under
     EQUIPMENT          operating leases with periods ranging from 24 to 48
                        months. In general, the lessee pays associated costs
                        such as repairs and maintenance, insurance and property
                        taxes.

                        Through March 31, 2005, the Partnership's leasing
                        operations consist substantially of operating leases and
                        seven direct-financing leases. Operating lease revenue
                        is recognized on a monthly basis in accordance with the
                        terms of the lease agreement. Unearned revenue from
                        direct financing agreements is amortized to revenue over
                        the lease term.

                                                                               8
<PAGE>

                        The Partnership's share of the computer equipment in
                        which they participate with other partnerships at March
                        31, 2005 and December 31, 2004 was approximately
                        $1,281,000 and $1,307,000, respectively, which is
                        included in the Partnership's fixed assets on their
                        balance sheet. The total cost of the equipment shared by
                        the Partnership with other partnerships at March 31,
                        2005 and December 31, 2004 was approximately $2,131,000
                        and $2,249,000, respectively. The Partnership's share of
                        the outstanding debt associated with this equipment at
                        March 31, 2005 and December 31, 2004 was approximately
                        $0 and $700, respectively, which is included in the
                        Partnership's liabilities on the balance sheet, and the
                        total outstanding debt at March 31, 2005 and December
                        31, 2004 related to the equipment shared by the
                        Partnership was approximately $0 and $1,000,
                        respectively.

                        The following is a schedule of future minimum rentals on
                        noncancellable operating leases at March 31, 2005:

                                                                      Amount
                                                                  --------------
                        Nine Months ended December 31, 2005       $      36,922
                        Year Ended December 31, 2006                     13,563
                                                                  --------------
                                                                  $      50,485
                                                                  ==============

5.   RELATED PARTY      REIMBURSABLE EXPENSES
     TRANSACTIONS
                        The General Partner and its affiliates are entitled to
                        reimbursement by the Partnership for the cost of
                        supplies and services obtained and used by the General
                        Partner in connection with the administration and
                        operation of the Partnership from third parties
                        unaffiliated with the General Partner. In addition, the
                        General Partner and its affiliates are entitled to
                        reimbursement for certain expenses incurred by the
                        General Partner and its affiliates in connection with
                        the administration and operation of the Partnership.
                        During the three months ended March 31, 2005 and 2003,
                        the Partnership recorded $41,000 and $63,000,
                        respectively, for reimbursement of expenses to the
                        General Partner.

                        EQUIPMENT ACQUISITION FEE

                        The General Partner is entitled to be paid an equipment
                        acquisition fee of 4% of the purchase price of each item
                        of equipment purchased as compensation for the
                        negotiation of the acquisition of the equipment and
                        lease thereof or sale under a conditional sales
                        contract. During the three months ended March 31, 2004,
                        equipment acquisition fees of approximately $1,000 were
                        earned by the General Partner. There were no equipment
                        acquisition fees earned by the General Partner during
                        the three months ended March 31, 2005.

                        EQUIPMENT MANAGEMENT FEE

                        The General Partner is entitled to be paid a monthly fee
                        equal to the lesser of (i) the fees which would be
                        charged by an independent third party for similar
                        services for similar equipment

                                                                               9
<PAGE>

                        or (ii) the sum of (a) 2% of (1) the gross lease
                        revenues attributable to equipment which is subject to
                        full payout net leases which contain net lease
                        provisions plus (2) the purchase price paid on
                        conditional sales contracts as received by the
                        Partnership and (b) 5% of the gross lease revenues
                        attributable to equipment which is subject to operating
                        and capital leases. During the three months ended March
                        31, 2005 and 2004, equipment management fees of
                        approximately $300 and $12,000, respectively, were
                        earned by the General Partner.

                        EQUIPMENT LIQUIDATION FEE

                        With respect to each item of equipment sold by the
                        General Partner (other than in connection with a
                        conditional sales contract), a fee equal to the lesser
                        of (i) 50% of the competitive equipment sale commission
                        or (ii) 3% of the sales price for such equipment is
                        payable to the General Partner. The payment of such fee
                        is subordinated to the receipt by the limited partners
                        of the net disposition proceeds from such sale in
                        accordance with the Partnership Agreement. Such fee will
                        be reduced to the extent any liquidation or resale fees
                        are paid to unaffiliated parties. During the three
                        months ended March 31, 2005 and March 31, 2004,
                        equipment liquidation fees of approximately $400 and
                        $2,000, respectively, were earned by the General
                        Partner.

                        Notes payable consisted of the following:

<TABLE>
<CAPTION>
                                                             MARCH 31,    DECEMBER 31,
                                                               2005           2004
                                                           ------------   ------------
                        <S>                                <C>            <C>
                        Installment notes payable to
                        banks; interest ranging from
                        6.25% to 6.75%, due in monthly
                        installments ranging from $240
                        to $1,875, including interest,
                        with final payments due from
                        February through April 2005.              4,764         82,902

                        Installment notes payable to
                        banks, interest ranging from
                        5.95% to 6.50%: due in monthly
                        installments ranging from $507
                        to $1,892, including interest,
                        with final payments due June,
                        2006.                                    78,819         33,065
                                                           ------------   ------------
                                                           $     83,583   $    115,967
                                                           ============   ============
</TABLE>

                             These notes are secured by specific computer
                             equipment and are nonrecourse liabilities of the
                             Partnership. Aggregate maturities of notes payable
                             for each of the periods subsequent to March 31,
                             2005 are as follows:

                                                                              10
<PAGE>

                                                                         Amount
                                                                       ---------
                             Nine months ended December 31, 2005       $  50,517
                             Year ended December 31, 2006                 33,066
                                                                       ---------
                                                                       $  83,583
                                                                       ---------

7.   SUPPLEMENTAL       Other noncash activities included in the determination
     CASH FLOW          of net loss are as follows:
     INFORMATION

Three months ended March 31,                          2005        2004
----------------------------------------------     ---------   ---------
Lease income, net of interest expense on notes
    payable realized as a result of direct
    payment of principal by lessee to bank         $   5,951   $ 183,325
                                                   =========   =========

     No interest or principal on notes payable was paid by the Partnership
     because direct payment was made by lessee to the bank in lieu of collection
     of lease income and payment of interest and principal by the Partnership.

          Noncash investing and financing activities include the following:

Three months ended March 31,                          2005        2004
------------------------------------------------   ---------   ---------
Offsetting of receivables from CCC with payables
    to General Partner                             $       -   $  53,678
                                                   =========   =========

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
            OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

The Partnership's discussion and analysis of its financial condition and results
of operations are based upon its financial statements which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the Partnership
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. The Partnership bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The Partnership believes that its critical accounting policies affect its more
significant judgments and estimates used in the preparation of its financial
statements.

                                                                              11
<PAGE>

COMPUTER EQUIPMENT

Commonwealth Capital Corp, on behalf of the Partnership and other affiliated
partnerships, acquires computer equipment subject to associated debt obligations
and lease revenue and allocates a participation in the cost, debt and lease
revenue to the various partnerships based on certain risk factors.

REVENUE RECOGNITION

Through March 31, 2005, the Partnership's leasing operations consist
substantially of operating leases and seven direct-financing leases. Operating
lease revenue is recognized on a monthly basis in accordance with the terms of
the lease agreement. Unearned revenue from direct financing agreements is
amortized to revenue over the lease term.

The Partnership reviews a customer's credit history before extending credit and
establishes a provision for uncollectible accounts receivable based upon the
credit risk of specific customers, historical trends and other information.

LONG-LIVED ASSETS

The Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable. The Partnership
determines whether an impairment exists by estimating the undiscounted cash
flows to be generated by each asset. If the estimated undiscounted cash flows
are less than the carrying value of the asset then an impairment exists. The
amount of the impairment is determined based on the difference between the
carrying value and the fair value. Fair value is determined based on estimated
discounted cash flows to be generated by the asset. Depreciation on computer
equipment for financial statement purposes is based on the straight-line method
over estimated useful lives of four years.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership's primary sources of capital for the three months ended March
31, 2005 and 2004 were net proceeds received from sale of equipment totaling
approximately $13,000 and $53,000, respectively, and the repayment of
receivables from CCC of approximately $3,000 and $71,000, respectively. The
primary uses of cash for the three months ended March 31, 2005 and 2004 were for
cash used in operations of approximately $5,000 and $41,000, respectively, and
the payment of preferred distributions to partners of approximately $115,000 for
the period ending March 31, 2004. There were no capital expenditures for the
periods ending March 31, 2005 and March 31, 2004.

For the three month period ended March 31, 2005 and 2004, the Partnership used
cash flows from operating activities of approximately $5,000. This includes a
net loss of approximately $173,000 and depreciation and amortization expenses of
approximately $111,000. Other noncash activities included in the determination
of net income include direct payments of lease income by lessees to banks of
approximately $6,000.

For the three month period ended March 31, 2004, the Partnership used cash flows
from operating activities of approximately $41,000, which includes a net loss of
approximately $115,000 and depreciation and amortization expenses of
approximately $204,000. Other noncash activities included in the determination
of net loss include direct payments of lease income by lessees to banks of
approximately $183,000.

                                                                              12
<PAGE>

Cash is invested in money market accounts that invest directly in treasury
obligations pending the Partnership's use of such funds to purchase additional
computer equipment, to pay Partnership expenses or to make distributions to the
Partners.

The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses. As
of March 31, 2005, the Partnership had future minimum rentals on non-cancelable
operating leases of $37,000 for the balance of the year ending December 31, 2005
and $14,000 thereafter. As of March 31, 2005, the Partnership had future minimum
rentals on noncancellable capital leases of $56,000 for the balance of the year
ending December 31, 2005 and $27,000 thereafter. At March 31, 2005, the
outstanding debt was $84,000, with interest rates ranging from 5.95% to 6.75%,
and will be payable through June 2006.

The Partnership's cash from operations is expected to continue to be adequate to
cover all operating expenses, liabilities, and preferred distributions to
Partners during the next 12-month period. If available Cash Flow or Net
Disposition Proceeds are insufficient to cover the Partnership expenses and
liabilities on a short and long term basis, the Partnership will attempt to
obtain additional funds by disposing of or refinancing Equipment, or by
borrowing within its permissible limits. The Partnership may, from time to time,
reduce the distributions to its Partners if it deems necessary. Since the
Partnership's leases are on a "triple-net" basis, no reserve for maintenance and
repairs are deemed necessary.

The Partnership's share of the computer equipment in which they participate with
other partnerships at March 31, 2005 and December 31, 2004 was approximately
$1,281,000 and $1,307,000, respectively, which is included in the Partnership's
fixed assets on their balance sheet. The total cost of the equipment shared by
the Partnership with other partnerships at March 31, 2005 and December 31, 2004
was approximately $2,131,000 and $2,249,000, respectively. The Partnership's
share of the outstanding debt associated with this equipment at March 31, 2005
and December 31, 2004 was approximately $0 and $700, respectively, which is
included in the Partnership's liabilities on the balance sheet, and the total
outstanding debt at March 31, 2005 and December 31, 2004 related to the
equipment shared by the Partnership was approximately $0 and $1,000,
respectively.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2005 compared to Three Months Ended March 31, 2004

For the quarter ended March 31, 2005, the Partnership recognized income of
approximately $29,000 and expenses of approximately $202,000, resulting in a net
loss of approximately $173,000. For the quarter ended March 31, 2004, the
Partnership recognized income of approximately $233,000 and expenses of
approximately $348,000, resulting in a net loss of approximately $115,000.

Lease income decreased by 88% to approximately $29,000 for the quarter ended
March 31, 2005, from approximately $233,000 for the quarter ended March 31,
2004, primarily due to the fact that more lease agreements ended since the
quarter ended March 31, 2004.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, outside service fees and reimbursement of expenses to CCC for
administration and operation of the Partnership. The operating expenses
decreased 25% to approximately

                                                                              13
<PAGE>

$83,000 for the quarter ended March 31, 2005, from approximately $111,000 for
the quarter ended March 31, 2004, which is primarily attributable to a decrease
in the amount charged by CCC, a related party, to the Partnership for the
administration and operation of approximately $20,000, and a decrease in
professional fees of approximately $12,000.

The equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee decreased 97% to approximately $300 for the quarter ended March
31, 2005, from approximately $12,000 for the quarter ended March 31, 2004, which
is consistent with the decrease in lease income.

Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
46% to approximately $110,000 for the quarter ended March 31, 2005, from
approximately $204,000 for the quarter ended March 31, 2004 due to equipment and
acquisition fees being fully depreciated/amortized and not being replaced with
new purchases.

The Partnership sold computer equipment with a net book value of approximately
$19,000 for the quarter ended March 31, 2005, for a net loss of approximately
$6,000. The Partnership sold computer equipment with a net book value of
approximately $63,000 for the quarter ended March 31, 2004, for a net loss of
approximately $10,000.

Interest expense decreased 81% to approximately $2,000 for the quarter ended
March 31, 2005 from approximately $11,000 for the quarter ended March 31, 2004,
primarily due to the decrease in debt relating to the purchase of computer
equipment.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership believes its exposure to market risk is not material due to the
fixed interest rate of its long-term debt and its associated fixed revenue
streams.

ITEM 4. CONTROLS AND PROCEDURES

The Chief Executive Officer and a Financial Officer of the Partnership have
conducted a review of the Partnership's disclosure controls and procedures as of
March 31, 2005.

The Company's disclosure controls and procedures include the Partnership's
controls and other procedures designed to ensure that information required to be
disclosed in this and other reports filed under the Securities Exchange Act of
1934, as amended (the " Exchange Act") is accumulated and communicated to the
Partnership's management, including its chief executive officer and a financial
officer, to allow timely decisions regarding required disclosure and to ensure
that such information is recorded, processed, summarized and reported with the
required time periods.

Based upon this review, the Partnership's Chief Executive Officer and the a
Financial Officer have concluded that the Partnership's disclosure controls (as
defined in pursuant to Rule 13a-14 c promulgated under the Exchange Act) are
sufficiently effective to ensure that the information required to be disclosed
by the Partnership in the reports it files under the Exchange Act is recorded,
processed, summarized and reported with adequate timeliness.

                                                                              14
<PAGE>

There have been no changes in the General Partner's internal controls or in
other factors that could materially affect our disclosure controls and
procedures in the quarter ended March 31, 2005, that have materially affected or
are reasonably likely to materially affect the General Partner's internal
controls over financial reporting.

PART II:   OTHER INFORMATION

               COMMONWEALTH INCOME & GROWTH FUND II

     Item 1.       LEGAL PROCEEDINGS.

                   N/A

     Item 2.       CHANGES IN SECURITIES.

                   N/A

     Item 3.       DEFAULTS UPON SENIOR SECURITIES.

                   N/A

     Item 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

                   N/A

     Item 5.       OTHER INFORMATION.

                   N/A

     Item 6.       EXHIBITS AND REPORTS ON FORM 8-K.

                   a)   Exhibits:

                        31.1 THE RULE 15d-14(a)
                        31.2  THE RULE 15d-14(a)
                        32.1 SECTION 1350 CERTIFICATION OF CEO
                        32.2 SECTION 1350 CERTIFICATION OF CFO

                     b)   Report on Form 8-K: None

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<PAGE>

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          COMMONWEALTH INCOME & GROWTH FUND II

                                               BY: COMMONWEALTH INCOME &
                                               GROWTH FUND, INC. General Partner

May 16, 2005                              By: /s/ George S. Springsteen
-------------                                 -------------------------
Date                                      George S. Springsteen
                                          President

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