<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 JUNE 30, 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
                                  JUNE 30, 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                                               13
Item 3.   Quantitative and Qualitative Disclosures About Market Risk          15
Item 4.   Controls and Procedures                                             15

                                     PART II

Item 1.   Legal Proceedings                                                   16
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.        16
Item 3.   Defaults Upon Senior Securities                                     16
Item 4.   Submission of Matters to a Vote of Securities Holders               16
Item 5.   Other Information                                                   16
Item 6.   Index to Exhibits


          Signatures

          Certifications

                                                                               2

<PAGE>



                      COMMONWEALTH INCOME & GROWTH FUND II
                     STATEMENT OF NET ASSETS IN LIQUIDATION


                                                                JUNE 30,
                                                                  2005
                                                              ------------
                                                               (UNAUDITED)
ASSETS

Cash and cash equivalents                                     $     63,344
Lease income receivable                                             30,619
Net investment in direct financing leases                           43,783
Other receivables - affiliated partnerships                         18,026
Deposits                                                                25
                                                              -------------
                                                                   155,797
                                                              -------------

Computer equipment, at cost                                      2,416,137
Accumulated depreciation                                        (2,280,748)
                                                              -------------
                                                                   135,389
                                                              -------------

Equipment acquisition costs and deferred expenses, net                 650
Accounts receivable, Commonwealth Capital Corp                      12,783
                                                              -------------
                                                                    13,433
                                                              -------------

TOTAL ASSETS                                                  $    304,619
                                                              =============

LIABILITIES AND NET ASSETS

LIABILITIES
Accounts payable                                              $     97,660
Accounts payable - General Partner                                 126,135
Accounts payable - Commonwealth Capital Corp                        12,691
Unearned lease income                                                4,608
Notes payable                                                       63,525
                                                              -------------
TOTAL LIABILITIES                                                  304,619
                                                              -------------

NET ASSETS IN LIQUIDATION                                     $          -
                                                              =============





            see accompanying notes to condensed financial statements

                                                                               3

<PAGE>

                      COMMONWEALTH INCOME & GROWTH FUND II
                STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION

                                                            THREE MONTHS ENDED
                                                                 JUNE 30,
                                                                   2005
                                                            ------------------
                                                                (UNAUDITED)

Net Assets in liquidation - April 1, 2005                        $    (34,651)

Lease income                                                           20,793
Interest and other                                                        193
Gain on sale of computer equipment                                     31,771


Operating, excluding depreciation                                     (50,335)
Equipment management fee - General Partner                             (2,294)
Interest                                                               (1,153)
Depreciation                                                          (91,968)

Distributions to Investors                                            (46,187)



Changes in estimated liquidation values
        of assets and liabilities                                    (173,831)
                                                                 -------------

NET ASSETS IN LIQUIDATION - JUNE 30, 2005                        $          -
                                                                 =============










            see accompanying notes to condensed financial statements

                                                                               4

<PAGE>



                      COMMONWEALTH INCOME & GROWTH FUND II
                            CONDENSED BALANCE SHEETS


                                                               DECEMBER 31,
                                                                 2004 (a)
                                                              -------------

ASSETS

Cash and cash equivalents                                     $      1,085
Lease income receivable                                              9,478
Net investment in direct financing leases                           86,487
Other receivables - affiliated partnerships                         16,792
Deposits                                                                25
                                                              -------------
                                                                   113,867
                                                              -------------

Computer equipment, at cost                                      2,850,669
Accumulated depreciation                                        (2,460,366)
                                                              -------------
                                                                   390,303
                                                              -------------

Equipment acquisition costs and deferred expenses, net               2,601
Accounts receivable, Commonwealth Capital Corp                      16,100
                                                              -------------
                                                                    18,701
                                                              -------------

TOTAL ASSETS                                                  $    522,871
                                                              =============

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Accounts payable                                              $     51,515
Accounts payable - General Partner                                  79,488
Accounts payable - Commonwealth Capital Corp                        42,499
Unearned lease income                                               94,576
Notes payable                                                      115,967
                                                              -------------
TOTAL LIABILITIES                                                  384,045
                                                              -------------

PARTNERS' CAPITAL
General partner                                                      1,000
Limited partners                                                   137,826
                                                              -------------
TOTAL PARTNERS' CAPITAL                                            138,826
                                                              -------------

TOTAL LIABILITIES AND PARTNERS' CAPITAL                       $    522,871
                                                              =============




           (a) Derived from the audited financial statements as of and
                      for the year ended December 31, 2004

            see accompanying notes to condensed financial statements

                                                                               5

<PAGE>

                      COMMONWEALTH INCOME & GROWTH FUND II
                       CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED       THREE MONTHS ENDED       SIX MONTHS ENDED
                                                         MARCH 31,                JUNE 30,                JUNE 30,
                                                           2005                     2004                    2004
                                                    --------------------------------------------     ------------------
                                                                     (UNAUDITED)                         (UNAUDITED)
<S>                                                   <C>                            <C>                     <C>
INCOME
Lease                                                 $      28,792                  $  217,069              $  449,843
Interest and other                                                -                         278                     415
                                                    --------------------------------------------------------------------

TOTAL INCOME                                                 28,792                     217,347                 450,258
                                                    --------------------------------------------------------------------

EXPENSES
Operating, excluding depreciation                            83,491                      55,690                 167,130
Equipment management fee - General Partner                      300                      10,853                  22,492
Interest                                                      2,093                       7,861                  18,888
Depreciation                                                109,294                     183,422                 375,152
Amortization of equipment
  acquisition costs and deferred expenses                     1,473                      12,370                  24,593
Loss on sale of computer equipment                            5,618                      13,861                  23,752
                                                    --------------------------------------------------------------------
TOTAL EXPENSES                                        $     202,269                     284,057                 632,007
                                                    --------------------------------------------------------------------

NET (LOSS)                                            $    (173,477)                 $  (66,710)             $ (181,749)
                                                    ====================================================================

NET (LOSS) PER EQUIVALENT LIMITED
  PARTNERSHIP UNIT                                    $       (0.38)                 $    (0.15)             $    (0.40)
                                                    ====================================================================

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



            see accompanying notes to condensed financial statements

                                                                               6

<PAGE>


                      COMMONWEALTH INCOME & GROWTH FUND II
                        CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND THE SIX MONTHS ENDED JUNE 30, 2004

<TABLE>
<CAPTION>
                                                           2005                   2004
                                                         --------------------------------
                                                                   (UNAUDITED)

<S>                                                        <C>                    <C>
NET CASH PROVIDED BY  OPERATING ACTIVITIES                 (5,421)                63,284
                                                         --------------------------------

INVESTING ACTIVITIES:

Net proceeds from the sale of computer equipment            13,249                67,351
Equipment acquisition fees paid to General Partner               -                 (846)
Capital Expenditures                                             -               (4,049)
                                                         --------------------------------

NET CASH PROVIDED BY INVESTING ACTIVITIES                   13,249                62,456
                                                         --------------------------------

FINANCING ACTIVITIES:
Distributions to partners                                        -             (230,880)
Debt placement fee paid to General Partner                       -                 (171)
Other receivables-Commonwealth Capital Corp                  3,317               132,151
                                                         --------------------------------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES          3,317              (98,900)
                                                         --------------------------------


Net increase in cash and equivalents                        11,145                26,840
Cash and cash equivalents, beginning of period               1,085                37,758
                                                         --------------------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                 $  12,230             $  64,598
                                                         ================================
</TABLE>


            see accompanying notes to condensed financial statements

                                                                               7

<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). The Partnership has begun
                        liquidation effective April 1, 2005. Particular items of
                        equipment may be sold at any time if, in the judgment of
                        the General Partner, it is in the best interest of the
                        Partnership to do so. The determination of whether
                        particular items of partnership equipment should be sold
                        will be made by the General Partner after consideration
                        of all relevant factors (including prevailing economic
                        conditions, the cash requirements of the Partnership,
                        potential capital appreciation, cash flow and federal
                        income tax considerations), with a view toward achieving
                        the principal investment objectives of the Partnership.

2.  SUMMARY OF          BASIS OF PRESENTATION
    SIGNIFICANT
    ACCOUNTING          As a result of the General Partner's approval of the
    POLICIES            plan of liquidation and the imminent nature of such
                        liquidation, we changed our basis of accounting to the
                        liquidation basis effective as of April 1, 2005. This
                        basis of accounting is considered appropriate when,
                        among other things, liquidation of a company is probable
                        and the net realizable value of assets is reasonably
                        determinable. Under the liquidation basis of accounting,
                        assets are stated at their estimated net realizable cash
                        value and liabilities are stated at their anticipated
                        settlement amounts. There are substantial risks and
                        uncertainties associated with carrying out the
                        liquidation of the Partnership. The valuations presented
                        in the accompanying Statement of Net Assets in
                        Liquidation represent estimates, based on present facts
                        and circumstances, of the net realizable values of
                        assets and the costs associated with carrying out the
                        liquidation. The actual costs and values are expected to
                        differ from the amounts shown herein and could be
                        greater or lesser than the amounts recorded.

                        Upon changing to the liquidation basis of accounting, we
                        recorded a $30,000 increase to net assets. This increase
                        represents the present value of future lease payments of
                        leases. We recorded $22,000 of accrued costs of
                        liquidation representing the estimate of the costs to be
                        incurred during liquidation. Unearned revenue was

                                                                               8

<PAGE>

                        decreased by $82,000, and payables to affiliates were
                        decreased by $84,000 to represent the expected
                        settlement value of these liabilities.

                        The financial information presented as of any date other
                        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.

                        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 six months ended June 30, 2005.

                        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
    DIRECT FINANCING    The following lists the components of the net investment
    LEASES              in direct financing leases as of June 30, 2005 and
                        December 31, 2004:

<TABLE>
<CAPTION>
                                                              JUNE 30,    December 31,
                                                                2005          2004
                                                             -------------------------
<S>                                                            <C>          <C>
                        Minimum lease payments receivable    $   66,001   $   103,927
                        Less: Unearned revenue                   22,218        17,440
                        --------------------------------------------------------------
                        Net investment in direct financing
                        leases                               $   43,783   $    86,487
                        ==============================================================

                        The following is a schedule of future minimum rentals on
                        noncancellable direct financing leases at June 30, 2005

                                                                             Amount
                                                                          ------------

                        Six Months Remaining December 31, 2005            $    32,808
                        Year Ended December 31, 2006                           33,193
                        --------------------------------------------------------------

                                                                          $    66,001
                        --------------------------------------------------------------
</TABLE>

                                                                               9

<PAGE>

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 June 30, 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.

                        Remarketing fees are paid to the leasing companies from
                        which the Partnership purchases leases. These are fees
                        that are earned by the leasing companies when the
                        initial terms of the lease have been met. The General
                        Partner believes that this strategy adds value since it
                        entices the leasing company to "stay with the lease" for
                        potential extensions, remarketing or sale of equipment.
                        This strategy potentially minimizes any conflicts the
                        leasing company may have with a potential new lease and
                        will potentially assist in maximizing overall portfolio
                        performance. The remarketing fee is tied into lease
                        performance thresholds and is factored in the
                        negotiation of the fee. Remarketing fees incurred in
                        connection with lease extensions are accounted for as
                        operating costs. Remarketing fees incurred in connection
                        with the sale of computer equipment are included in our
                        gain or loss calculations. For the six months ended June
                        30, 2005 and 2004, remarketing fees were paid in the
                        amounts of $15,000 and $2,000, respectively.

                                                                              10

<PAGE>

                        The Partnership's share of the computer equipment in
                        which they participate with other partnerships at June
                        30, 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 June 30, 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 June
                        30, 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 June 30, 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 June 30, 2005:
<TABLE>
<CAPTION>
                                                                             Amount
                        --------------------------------------------------------------
<S>                                                                       <C>
                         Six Months ended December 31, 2005               $    16,116
                         Year Ended December 31, 2006                          14,030
                        --------------------------------------------------------------

                                                                          $    30,146
                        ==============================================================
</TABLE>

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 six months ended June 30, 2005 and 2004, the
                        Partnership recorded $62,000 and $110,000, 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. There were no equipment acquisition fees
                        earned by the General Partner during the six months
                        ended June 30, 2005. During the six months ended June
                        30, 2004, equipment acquisition fees of approximately
                        $1,000 were earned by the General Partner.

                        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 or (ii) the sum of (a) 2%
                        of (1) the gross lease revenues attributable to
                        equipment which is subject to full payout net leases

                                                                              11

<PAGE>

                        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 six months ended June 30,
                        2005 and 2004, equipment management fees of
                        approximately $2,600 and $23,000, 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 six months
                        ended June 30, 2005 and June 30, 2004, equipment
                        liquidation fees of approximately $1,000 and $2,000,
                        respectively, were earned by the General Partner.


6. NOTES PAYABLE        Notes payable consisted of the following:
<TABLE>
<CAPTION>
                                                              JUNE 30,    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.         $      -0-   $    82,902

                        Installment notes payable to
                        banks, interest ranging from
                        5.0% to 6.50%: due in monthly
                        installments ranging from $507
                        to $1,736, including interest,
                        with final payments due June,
                        2006.                                    63,525        33,065
                                                             ------------------------
                                                             $   63,525   $   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 June 30, 2005 are as follows:

                                                                              12

<PAGE>

<TABLE>
<CAPTION>
                                                                             Amount
                                                                          -----------

<S>                                                                       <C>
                        Six months ended December 31, 2005                $    31,286
                         Year ended December 31, 2006                          32,239
                                                                          -----------
                                                                          $    63,525
                                                                          -----------
</TABLE>

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


Six months ended June 30,                                 2005          2004
--------------------------------------------------------------------------------

Lease income, net of interest expense on
   notes payable realized as a result of
   direct payment of principal by lessee
   to bank                                             $   12,049   $   360,331
================================================================================

           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:

Six months ended June 30,                                 2005          2004
--------------------------------------------------------------------------------

================================================================================
Offsetting of receivables from CCC with payables to
     General Partner                                   $        -   $   107,356
================================================================================


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

LIQUIDITY AND CAPITAL RESOURCES

As a result of the General Partner's approval of the plan of dissolution and the
imminent nature of the liquidation, we changed our basis of accounting to the
liquidation basis as of April 1, 2005. This basis of accounting is considered
appropriate when, among other things, liquidation of a company is probable and
the net realizable value of assets is reasonably determinable. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable cash value and liabilities are stated at their anticipated settlement
amounts. Particular items of equipment may be sold at any time if, in the
judgment of the General Partner, it is in the best interest of the Partnership
to do so. The determination of whether particular items of partnership equipment
should be sold will be made by the General Partner after consideration of all
relevant factors (including prevailing economic conditions, the cash
requirements of the Partnership, potential capital appreciation, cash flow and
federal income tax considerations), with a view toward achieving the principal
investment objectives of the Partnership.

The Partnership's primary sources of capital for the six months ended June 30,
2005 and 2004 were net proceeds received from sale of equipment totaling
approximately $38,000 and $67,000, and the repayment of receivables from CCC of
approximately $132,000 for the six months ended June 30, 2004. The primary uses
of cash for the six months ended June 30, 2005 and 2004 were for the payment of
preferred distributions to partners of approximately $46,187 and $231,000,
respectively. There were no capital expenditures for the periods ending June 30,
2005 and June 30, 2004.

                                                                              13

<PAGE>

For the six month period ended June 30, 2005, the Partnership generated cash
flows from operating activities of approximately $67,000. This includes a net
loss of approximately $253,000, and depreciation and amortization expenses of
approximately $203,000. Other noncash activities included in the determination
of net income include direct payments of lease income by lessees to banks of
approximately $12,000.

For the six month period ended June 30, 2004, the Partnership used cash flows
from operating activities of approximately $63,000, which includes a net loss of
approximately $182,000 and depreciation and amortization expenses of
approximately $400,000. Other noncash activities included in the determination
of net loss include direct payments of lease income by lessees to banks of
approximately $360,000.

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.

As of June 30, 2005, the Partnership had future minimum rentals on
non-cancelable operating leases of $16,000 for the balance of the year ending
December 31, 2005 and $14,000 thereafter. As of June 30, 2005, the Partnership
had future minimum rentals on noncancellable capital leases of $33,000 for the
balance of the year ending December 31, 2005 and $33,000 thereafter. At June 30,
2005, the outstanding debt was $64,000, with interest rates ranging from 5.00%
to 6.5%, and will be payable through June 2006.

The Partnership's share of the computer equipment in which they participate with
other partnerships at June 30, 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 June 30, 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 June 30, 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 June 30, 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 Six Months Ended June 30, 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 six months ended June 30, 2004, the
Partnership recognized income of approximately $450,000 and expenses of
approximately $632,000, resulting in a net loss of approximately $182,000.

Lease income decreased by 94% to approximately $29,000 for the three months
ended March 31, 2004, from approximately $450,000 for the six months ended June
30, 2004, due to the fact that more lease agreements ended since the six months
ended June 30, 2004 and no new leases were purchased during that time period.

                                                                              14

<PAGE>

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 50% to approximately $83,000 for the three months ended March 31,
2005, from approximately $167,000 for the six months ended June 30, 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 the fund and a
decrease in professional fees.

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 99% to approximately $300 for the three months ended
March 31, 2005, from approximately $22,000 for the six months ended June 30,
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
72% to approximately $110,000 for the three months ended March 31, 2005, from
approximately $400,000 for the six months ended June 30, 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 three months ended March 31, 2005, for a net loss of
approximately $6,000. The Partnership sold computer equipment with a net book
value of approximately $91,000 for the six months ended June 30, 2004, for a net
loss of approximately $24,000.


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 General Partner have
conducted a review of the Partnership's disclosure controls and procedures as of
June 30, 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 General Partner's Chief Executive Officer and 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

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<PAGE>

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.

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 June 30, 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

August 18, 2005                     By: /s/ Kimberly A. Springsteen
---------------                     -------------------------------
Date                                Kimberly A. Springsteen
                                    President


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