<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, 2004

( ) 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>
                          COMMONWEALTH INCOME & GROWTH FUND II
                                     BALANCE SHEETS
<TABLE>
<CAPTION>
                                                           MARCH 31        DECEMBER 31,
                                                             2004             2003
                                                         -----------       -----------
                                                         (UNAUDITED)
<S>                                                      <C>               <C>
ASSETS

Cash and cash equivalents                                $     5,977       $    37,758
Lease income receivable                                        8,587             4,550
Net investment in direct financing leases                    131,481           146,478
Other receivables - affiliated partnerships                    7,888             7,888
Prepaid expenses                                               8,432             3,200
                                                         -----------       -----------
                                                             162,365           199,874
                                                         -----------       -----------

Computer equipment, at cost                                5,048,476         5,409,223
Accumulated depreciation                                  (3,907,936)       (4,013,668)
                                                         -----------       -----------
                                                           1,140,540         1,992,457
                                                         -----------       -----------

Equipment acquisition costs and deferred expenses, net        30,683            42,906
Accounts receivable, Commonwealth Capital Corp               229,610           354,122
                                                         -----------       -----------
                                                             260,293           397,028
                                                         -----------       -----------
TOTAL ASSETS                                             $ 1,563,198       $ 1,992,457
                                                         ===========       ===========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Accounts payable                                         $    54,479       $    53,606
Accounts payable - General Partner                            27,061            20,065
Other accrued expenses                                         3,500             5,938
Unearned lease income                                         92,996           100,040
Notes payable                                                531,198           728,365
                                                         -----------       -----------
TOTAL LIABILITIES                                            709,234           908,014
                                                         -----------       -----------

PARTNERS' CAPITAL
General partner                                                1,000             1,000
Limited partners                                             852,964         1,083,443
                                                         -----------       -----------
TOTAL PARTNERS' CAPITAL                                      853,964         1,084,443
                                                         -----------       -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL                  $ 1,563,198       $ 1,992,457
                                                         ===========       ===========
</TABLE>



                     see accompanying notes to financial statements




<PAGE>


                         COMMONWEALTH INCOME & GROWTH FUND II
                               STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                                     MARCH 31,
                                                                 2004           2003
                                                               ---------     --------
                                                                     (unaudited)
<S>                                                            <C>           <C>
INCOME
Lease                                                          $ 232,774     $542,526
Interest and other                                                   137          175
                                                               ---------     --------

TOTAL INCOME                                                     232,911      542,701
                                                               ---------     --------

EXPENSES
Operating, excluding depreciation                                111,440      193,764
Equipment management fee - General Partner                        11,639       27,127
Interest                                                          11,027       29,950
Depreciation                                                     191,730      266,262
Amortization of equipment
  acquisition costs and deferred expenses                         12,223       16,378
Loss on sale of computer equipment                                 9,891        5,291
                                                               ---------     --------
TOTAL EXPENSES                                                   347,950      538,772
                                                               ---------     --------

NET (LOSS) INCOME                                              $(115,039)    $  3,929
                                                               =========     ========

NET (LOSS) INCOME PER EQUIVALENT LIMITED
  PARTNERSHIP UNIT                                             $   (0.25)    $    .01
                                                               =========     ========

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












                    see accompanying notes to financial statements


<PAGE>

<TABLE>
<CAPTION>
                                        COMMONWEALTH INCOME & GROWTH FUND II
                                          STATEMENTS OF PARTNERS' CAPITAL

                                                           FOR THE THREE MONTHS ENDED MARCH 31, 2004
                                                                          (UNAUDITED)

                                            GENERAL LIMITED
                                                PARTNER        PARTNER     GENERAL       LIMITED
                                                 UNITS          UNITS      PARTNER       PARTNER         TOTAL
                                            ---------------    -------     -------      ----------     -----------
<S>                                         <C>                <C>         <C>          <C>            <C>
PARTNERS' CAPITAL - DECEMBER 31, 2003                    50    460,067     $ 1,000      $1,083,443     $ 1,084,443
  Net income (loss)                                                          1,154        (116,193)       (115,039)
  Distributions                                                             (1,154)       (114,286)       (115,440)
                                            ---------------    -------     -------      ----------     -----------
PARTNERS' CAPITAL - MARCH 31, 2004                       50    460,067     $ 1,000      $  852,964     $   853,964
                                            ===============    =======     =======      ==========     ===========
</TABLE>








                 see accompanying notes to financial statements



<PAGE>

                           COMMONWEALTH INCOME & GROWTH FUND II
                                  STATEMENTS OF CASH FLOW
                    FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                2004              2003
                                                              ---------         ---------
OPERATING ACTIVITIES                                                  (UNAUDITED)
<S>                                                           <C>               <C>
Net (loss) income                                             $(115,039)        $   3,929
Adjustments to reconcile net (loss) income to net cash
   (used in) provided by operating activities
       Depreciation and amortization                            203,953           282,640
       Loss on sale of computer equipment                         9,891             5,291
       Other noncash activities included in
          determination of net (loss) income                   (183,325)         (275,213)
       Changes in assets and liabilities
         (Increase) decrease in assets
              Lease income receivable                            (4,037)              692
              Minimum lease receivables                           1,155               504
              Other receivable, General Partner                       -            53,669
              Other receivables - affiliated partnerships             -            (3,401)
              Prepaid expenses                                   (5,232)            3,019
         Increase (decrease) in liabilities
              Accounts payable                                      873           132,131
              Accounts payable, General Partner                  60,674            (6,318)
              Other accrued expenses                             (2,438)                -
              Unearned lease income                              (7,044)          (41,112)
                                                              ---------         ---------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES             (40,569)          155,831
                                                              ---------         ---------

INVESTING ACTIVITIES:

Capital expenditures                                                  -           (15,000)
Net proceeds from the sale of computer equipment                 53,394             2,800
Equipment acquisition fees paid to General Partner                    -              (600)
                                                              ---------         ---------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES              53,394           (12,800)
                                                              ---------         ---------

FINANCING ACTIVITIES:
Distributions to partners                                      (115,440)         (115,440)
Other receivables-Commonwealth Capital Corp                      70,834            (9,998)
                                                              ---------         ---------


NET CASH (USED IN) FINANCING ACTIVITIES                         (44,606)         (125,438)
                                                              ---------         ---------


Net (decrease) increase in cash and equivalents                 (31,781)           17,593
Cash and cash equivalents, beginning of period                   37,758            33,361
                                                              ---------         ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                      $   5,977         $  50,954
                                                              =========         =========
</TABLE>


                      see accompanying notes to financial statements


<PAGE>
<TABLE>
<CAPTION>
                                            NOTES TO FINANCIAL STATEMENTS
<S>                                <C>
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 than December 31
        POLICIES                   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, 2003. Operating
                                   results for the three-month period ended March 31, 2004 are not
                                   necessarily indicative of financial results that may be expected for the
                                   full year ended December 31, 2004.

                                   REVENUE RECOGNITION

                                   Through March 31, 2004, 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.
</TABLE>



<PAGE>
<TABLE>
<CAPTION>
                                   USE OF ESTIMATES
<S>                                <C>
                                   The preparation of financial statements in conformity with generally
                                   accepted accounting principles requires management to make estimates and
                                   assumptions that affect the reported amounts of assets and liabilities and
                                   disclosure of contingent assets and liabilities at the date of the
                                   financial statements and the reported amounts of revenues and expenses
                                   during the reporting period. Actual results could differ from those
                                   estimates.

                                   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. As of March 31, 2004, there is no impairment.

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

                                   INTANGIBLE ASSETS

                                   Equipment acquisition costs and deferred expenses, are amortized on a
                                   straight-line basis over two-to-four year lives. Unamortized acquisition
                                   fees and deferred expenses are charged to amortization expense when the
                                   associated leased equipment is sold.

                                   CASH AND CASH EQUIVALENTS

                                   The Partnership considers all highly liquid investments with a maturity of
                                   three months or less to be cash equivalents. Cash equivalents have been
                                   invested in a money market fund investing directly in Treasury
                                   obligations.

                                   INCOME TAXES

                                   The Partnership is not subject to federal income taxes; instead, any
                                   taxable income (loss) is passed through to the partners and included on
                                   their respective income tax returns.

                                   Taxable income differs from financial statement net income as a result of
                                   reporting certain income and expense items for tax purposes in periods
                                   other than those used for financial statement purposes, principally
                                   relating to depreciation, amortization, and lease income.
</TABLE>




<PAGE>
<TABLE>
<CAPTION>
                                   OFFERING COSTS
<S>                                <C>
                                   Offering costs are payments for selling commissions, dealer manager fees,
                                   professional fees and other offering expenses relating to the syndication.
                                   Selling commissions were 7% of the partners' contributed capital and
                                   dealer manager fees were 2% of the partners' contributed capital. These
                                   costs have been deducted from partnership capital in the accompanying
                                   financial statements.

                                   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.

                                   REIMBURSABLE EXPENSES

                                   Reimbursable expenses, which are charged to the Partnership by CCC in
                                   connection with the administration and operation of the Partnership, are
                                   allocated to the Partnership based upon several factors including, but not
                                   limited to, the number of investors, compliance issues, and the number of
                                   existing leases.

3.      NET INVESTMENT IN          The following lists the components of the net investment in direct
        DIRECT FINANCING           financing leases as of March 31, 2004 and December 31, 2003:
        LEASES
                                                                                  MARCH 31,        December 31,
                                                                                    2004              2003
                                                                                  --------          --------
                                   Minimum lease payments receivable              $158,008          $176,035
                                   Less: Unearned revenue                           26,527            29,557
                                                                                  --------          --------
                                   Net investment in direct financing leases      $131,481          $146,478
                                                                                  ========          ========

                                   The following is a schedule of future minimum
                                   rentals on noncancellable direct financing
                                   leases at March 31, 2004

                                                                                                     Amount
                                                                                                    --------

                                   Nine Months Remaining December 31, 2004                          $ 54,081
                                   Year Ended December 31, 2005                                       70,183
                                   Year Ended December 31, 2006                                       33,744
                                                                                                    --------
                                                                                                    $158,008
                                                                                                    ========
</TABLE>




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

                                   The Partnership's share of the computer equipment in which they
                                   participate with other partnerships at March 31, 2004 and December 31,
                                   2003 was approximately $1,660,000 for both period ends, which is included
                                   in the Partnership's fixed assets on their balance sheet, and the total
                                   cost of the equipment shared by the Partnership with other partnerships at
                                   March 31, 2004 and December 31, 2003 was approximately $2,813,000 for both
                                   period ends. The Partnership's share of the outstanding debt associated
                                   with this equipment at March 31, 2004 and December 31, 2003 was
                                   approximately $295,000 and $422,000, respectively, which is included in
                                   the Partnership's liabilities on the balance sheet, and the total
                                   outstanding debt at March 31, 2004 and December 31, 2003 related to the
                                   equipment shared by the Partnership was approximately $475,000 and
                                   $696,000, respectively.

                                   The following is a schedule of future minimum rentals on noncancellable
                                   operating leases at March 31, 2004:

                                                                                                     Amount
                                                                                                    --------
                                     Nine Months ended December 31, 2004                            $474,000
                                     Year Ended December 31, 2005                                     47,000
                                     Year Ended December 31, 2006                                     13,000
                                                                                                    --------

                                                                                                    $534,000
                                                                                                    ========

5.      RELATED PARTY              OTHER RECEIVABLES
        TRANSACTIONS
                                   As of March 31, 2004, the Partnership has a non-interest bearing
                                   receivable from CCC, a related party to the Partnership, in the amount of
                                   approximately $230,000. CCC, through its indirect subsidiaries, including
                                   the General Partner of the Partnership, earns fees based on revenues and
                                   new lease purchases from this fund. This receivable has been reduced by
                                   approximately $125,000 in the three months ending March 31, 2004 by the
                                   offsetting of equipment management and acquisition fees and payments by
                                   CCC. CCC intends to repay the balance of the receivable, through
                                   acquisition and debt placement fees, over approximately the next several
                                   fiscal years, with a minimum payment of $10,000 per month, commencing
                                   March 1, 2004.

                                   REIMBURSABLE EXPENSES

                                   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
</TABLE>



<PAGE>
<TABLE>
<S>                                <C>
                                   affiliates in connection with the administration and operation of the
                                   Partnership. During the three months ended March 31, 2004 and 2003, the
                                   Partnership recorded $63,000 and $84,000, 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, 2003, 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, 2004.

                                   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)
                                   two percent 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, 2004 and 2003, equipment
                                   management fees of approximately $12,000 and $27,000, 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)
                                   three percent 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, 2004, equipment liquidation fees
                                   of approximately $2,000 were earned by the General Partner. There were no
                                   equipment liquidation fees earned by the General Partner during the three
                                   months ended March 31, 2003.
</TABLE>





<PAGE>
<TABLE>
<S>                            <C>
6.      NOTES PAYABLE              Notes payable consisted of the following:


                                                                                  MARCH 31,     DECEMBER 31,
                                                                                    2004           2003
                                                                                  --------      ------------

                               Installment notes payable to banks; interest
                               ranging from 6.50% to 8.75%, due in monthly
                               installments ranging from $96 to $22,799,
                               including interest, with final payments due from
                               February through November 2004.                    $330,706      $    498,520

                               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.                         59,342            74,204

                               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.                                               141,150           155,641
                                                                                  --------      ------------
                                                                                  $531,198      $    728,365
                                                                                  ========      ============

                                    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, 2004 are as follows:
                                                                                                   Amount
                                                                                                ------------
                                       Nine months ended December 31, 2004                      $    421,597
                                       Year ended December 31, 2005                                   76,535
                                       Year ended December 31, 2006                                   33,066
                                                                                                ------------
                                                                                                $    531,198
                                                                                                ------------
</TABLE>




<PAGE>
<TABLE>
<S>                                <C>
7.      SUPPLEMENTAL               Other noncash activities included in the determination of net loss are as
        CASH FLOW                  follows:
        INFORMATION

Three months ended March 31,                                2004       2003
---------------------------                               --------   --------

Lease income, net of interest expense on
  notes payable realized as a result of
  direct payment of principal by lessee to bank           $183,325   $275,213
                                                          ========   ========

           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,                                2004       2003
----------------------------                              --------   --------

Net book value of equipment converted to
    direct financing leases                               $      -   $  3,346
                                                          --------   --------
Offsetting of receivables from CCC with
    payables to General Partner                           $ 53,678   $      -
                                                          ========   ========
</TABLE>

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

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was released by the Securities and
Exchange Commission, requires all companies to include a discussion of critical
accounting policies or methods used in the preparation of financial statements.
Our significant accounting policies are described in Note 1 of the Notes to the
Financial Statements. The significant accounting policies that we believe are
the most critical to aid in fully understanding our reported financial results
include the following:

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, 2004, 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





<PAGE>

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, 2004 and 2003 were net proceeds received from sale of equipment totaling
approximately $53,000 and $3,000, respectively, the repayment of receivables
from CCC of approximately $71,000 for the period ending March 31, 2004 and cash
from operations of approximately $156,000 for the period ending March 31, 2003.
The primary uses of cash for the three months ended March 31, 2004 and 2003 were
for the payment of preferred distributions to partners of approximately $115,000
for both period ends, cash used in operations of approximately $41,000 for the
period ending March 31, 2004 and capital expenditures for new equipment totaling
approximately $15,000 for the period ending March 31, 2003. There were no
capital expenditures for the period ending March 31, 2004.

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 income include direct payments of lease income by lessees to banks of
approximately $183,000.

For the three month period ended March 31, 2003, the Partnership generated cash
flows from operating activities of approximately $156,000, which includes net
income of approximately $4,000 and depreciation and amortization expenses of
approximately $283,000. Other noncash activities included in the determination
of net loss include direct payments of lease income by lessees to banks of
approximately $275,000.

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 March 31, 2004, the Partnership has a non-interest bearing receivable from
CCC, a related party to the Partnership, in the amount of approximately
$230,000. CCC, through its indirect subsidiaries, including the General Partner
of the Partnership, earns fees based on revenues and new lease purchases from
this fund. This receivable has been reduced by approximately $125,000 in the
three months ending March 31, 2004 by the offsetting of equipment management and
acquisition fees and payments by CCC. CCC intends to repay the balance of the
receivable, through acquisition and debt placement fees, over approximately the
next several fiscal years, with a minimum payment of $10,000 per month,
commencing March 1, 2004.

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, 2004, the Partnership had future minimum rentals on non-cancelable
operating leases of $474,000 for the balance of the year ending December 31,



<PAGE>

2004 and $60,000 thereafter. As of March 31, 2004, the Partnership had future
minimum rentals on noncancellable capital leases of $54,000 for the balance of
the year ending December 31, 2004 and $104,000 thereafter. At March 31, 2004,
the outstanding debt was $531,000, with interest rates ranging from 5.95% to
8.75%, 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, 2004 and December 31, 2003 was approximately
$1,660,000 for both period ends, which is included in the Partnership's fixed
assets on their balance sheet, and the total cost of the equipment shared by the
Partnership with other partnerships at March 31, 2004 and December 31, 2003 was
approximately $2,813,000 for both period ends. The Partnership's share of the
outstanding debt associated with this equipment at March 31, 2004 and December
31, 2003 was approximately $295,000 and $422,000, respectively, which is
included in the Partnership's liabilities on the balance sheet, and the total
outstanding debt at March 31, 2004 and December 31, 2003 related to the
equipment shared by the Partnership was approximately $475,000 and $696,000,
respectively.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2004 compared to Three Months Ended March 31, 2003
-------------------------------------------------------------------------------

 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. For the quarter ended March 31, 2003, the
Partnership recognized income of approximately $543,000 and expenses of
approximately $538,000, resulting in net income of approximately $4,000.

Lease income decreased by 57% to approximately $233,000 for the quarter ended
March 31, 2004, from approximately $543,000 for the quarter ended March 31,
2003, primarily due to the fact that more lease agreements ended since the
quarter ended March 31, 2003.

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 expense decreased 43% to
approximately $111,000 for the quarter ended March 31, 2004, from approximately
$194,000 for the quarter ended March 31, 2003, 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 $14,000, a decrease in
remarketing fees of approximately $79,000 and an increase in professional fees
of approximately $14,000.




<PAGE>

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 57% to approximately $12,000 for the quarter ended
March 31, 2004, from approximately $27,000 for the quarter ended March 31, 2003,
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
28% to approximately $204,000 for the quarter ended March 31, 2004, from
approximately $282,000 for the quarter ended March 31, 2003 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
$63,000 for the quarter ended March 31, 2004, for a net loss of approximately
$10,000. The Partnership sold computer equipment with a net book value of
approximately $8,000 for the quarter ended March 31, 2003, for a net loss of
approximately $5,000.

Interest expense decreased 63% to approximately $11,000 for the quarter ended
March 31, 2004 from approximately $30,000 for the quarter ended March 31, 2003,
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.

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, 2004.

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 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.






<PAGE>

PART II: OTHER INFORMATION

                      COMMONWEALTH INCOME & GROWTH FUND II

         Item 1.          LEGAL PROCEEDINGS.

                          Inapplicable

         Item 2.          CHANGES IN SECURITIES.

                          Inapplicable

         Item 3.          DEFAULTS UPON SENIOR SECURITIES.

                          Inapplicable

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

                          Inapplicable

         Item 5.          OTHER INFORMATION.

                          Inapplicable


         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


                                    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 24, 2004                                By: /s/ George S. Springsteen
------------------                             ---------------------------------
Date                                        George S. Springsteen
                                            President