<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 SEPTEMBER 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
                               SEPTEMBER 30, 2005

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>          <C>                                                                    <C>
                                           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
            Index to Exhibits
Item 6.                                                                              16

            Signatures

            Certifications
</TABLE>

                                                                               2
<PAGE>
                      COMMONWEALTH INCOME & GROWTH FUND II
                     STATEMENT OF NET ASSETS IN LIQUIDATION


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

Cash and cash equivalents                                         $     1,136
Lease income receivable,  net of reserves of $0 as of
   September 30, 2005                                                  25,275
Net investment in direct financing leases                              30,136
Other receivables - affiliated partnerships                            18,429
Deposits                                                                   25
                                                                  -----------

                                                                       75,001
                                                                  -----------

Computer equipment, at cost                                         1,881,579
Accumulated depreciation                                           (1,834,819)
                                                                  -----------
                                                                       46,760
                                                                  -----------


Equipment acquisition costs and deferred expenses, net                    530
Accounts receivable, Commonwealth Capital Corp                         12,782
                                                                  -----------
                                                                       13,312
                                                                  -----------

TOTAL ASSETS                                                      $   135,073
                                                                  ===========

LIABILITIES AND NET ASSETS

LIABILITIES
Accounts payable                                                  $    33,099
Accounts payable - General Partner                                     53,974
Notes payable                                                          48,000
                                                                  -----------
TOTAL LIABILITIES                                                     135,073
                                                                  -----------

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
<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                     SEPTEMBER 30,                  SEPTEMBER 30,
                                                                         2005                           2005
                                                                     (UNAUDITED)                     (UNAUDITED)

<S>                                                                  <C>                           <C>
Net Assets in liquidation - beginning                                $          -                  $    (34,651)

Lease income                                                               11,948                        32,741
Interest and other                                                              -                           193

Gain on sale of computer equipment                                              -                        31,771


Operating, excluding depreciation                                         (28,347)                      (78,683)
Equipment management fee - General Partner                                   (617)                       (2,911)
Interest                                                                     (879)                       (2,032)
Depreciation                                                              (88,137)                     (180,105)
Loss on sale of computer equipment                                           (521)                         (521)

Distributions to Investors                                                (57,508)                     (103,694)
Contributions from CCC                                                    131,764                       131,764

Changes in estimated liquidation values
    of assets and liabilities                                              32,297                       206,128
                                                                     ------------                  ------------

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

</TABLE>
            see accompanying notes to condensed financial statements


                                                                               4
<PAGE>
                      COMMONWEALTH INCOME & GROWTH FUND II
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                              2004 (A)
                                                                          --------------
<S>                                                                             <C>
ASSETS

Cash and cash equivalents                                                   $     1,085
Lease income receivable, net of reserves of $0 as of
    December 31, 2004                                                             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
                                                                            ===========
</TABLE>


(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          NINE MONTHS ENDED
                                                           MARCH 31,               SEPTEMBER 30,               SEPTEMBER 30,
                                                            2005                       2004                        2004
                                                         (UNAUDITED)               (UNAUDITED)                 (UNAUDITED)

<S>                                                           <C>                        <C>                        <C>
INCOME
Lease                                                  $     28,792                  $  168,910                 $  618,753

Interest and other                                                -                       2,701                      3,116
                                                      ---------------------------------------------------------------------

TOTAL INCOME                                                 28,792                     171,611                    621,869
                                                      ---------------------------------------------------------------------

EXPENSES
Operating, excluding depreciation                            83,491                     104,262                    338,469
Equipment management fee - General Partner                      300                       8,446                     30,938
Interest                                                      2,093                       4,807                     23,695
Depreciation                                                109,294                     180,020                    555,172
Amortization of equipment
  acquisition costs and deferred expenses                     1,473                      12,163                     36,756
Loss on sale of computer equipment                            5,618                       6,746                     30,498

                                                      ---------------------------------------------------------------------
TOTAL EXPENSES                                         $    202,269                     316,444                  1,015,528
                                                      ---------------------------------------------------------------------

NET (LOSS)                                             $   (173,477)                 $ (144,833)                $ (393,659)
                                                      =====================================================================

NET (LOSS) PER EQUIVALENT LIMITED
  PARTNERSHIP UNIT                                     $      (0.38)                 $    (0.31)                $    (0.86)
                                                      =====================================================================

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 NINE MONTHS ENDED
                               SEPTEMBER 30, 2004

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

<S>                                                             <C>                 <C>

NET CASH PROVIDED BY  OPERATING ACTIVITIES                    (5,421)             (84,232)
                                                        -----------------------------------

INVESTING ACTIVITIES:

Net proceeds from the sale of computer equipment              13,249              154,121
Equipment acquisition fees paid to General Partner                 -                 (846)
Capital Expenditures                                               -               (4,049)
                                                        -----------------------------------

NET CASH PROVIDED BY INVESTING ACTIVITIES                     13,249              149,226
                                                        -----------------------------------

FINANCING ACTIVITIES:
Distributions to partners                                          -             (346,319)
Debt placement fee paid to General Partner                         -                 (171)
Other receivables-Commonwealth Capital Corp                    3,317              246,766
                                                        -----------------------------------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES            3,317              (99,724)
                                                        -----------------------------------


Net increase in cash and equivalents                          11,145              (34,730)
Cash and cash equivalents, beginning of period                 1,085               37,758
                                                        -----------------------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                $     12,230             $  3,028
                                                        ===================================
</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. The Partnership began
                  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.

                  BASIS OF PRESENTATION

2. SUMMARY OF     As a result of the General Partner's approval of the plan of
   SIGNIFICANT    liquidation and the imminent nature of such liquidation, we
   ACCOUNTING     changed our basis of accounting to the liquidation basis
   POLICIES       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
                  represented 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. These costs were decreased to $13,500 for the
                  period ending September 30, 2005. As of September 30, 2005,
                  unearned revenue has been decreased by $88,000, and payables
                  to affiliates were decreased by $194,000 to represent the
                  expected settlement value of these liabilities.


                                                                               8
<PAGE>

                    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 nine months ended September 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   The following lists the components of the net investment in
   IN DIRECT        direct financing leases as of September 30, 2005 and
   FINANCING        December 31, 2004:
   LEASES
<TABLE>
<CAPTION>
                                                                   SEPTEMBER 30,      December 31,
                                                                       2005               2004
                                                                  -------------------------------
                       <S>                                              <C>               <C>
                   Minimum lease payments receivable                 $ 49,212          $ 103,927
                   Less: Unearned revenue                              19,076             17,440
                   ------------------------------------------------------------------------------
                   Net investment in direct financing leases         $ 30,136           $ 86,487
                   ==============================================================================
</TABLE>

                                                                               9
<PAGE>
                    The following is a schedule of future minimum rentals on
                    noncancellable direct financing leases at September 30, 2005

                                                                        Amount
                                                                      ----------
                    Three months Remaining December 31, 2005          $   16,404
                    Year Ended December 31, 2006                          32,808
                    ------------------------------------------------------------

                                                                      $   49,212
                    ============================================================

4. COMPUTER         The Partnership is the lessor of equipment under operating
   EQUIPMENT        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 September 30, 2005, the Partnership's leasing
                    operations consist substantially of operating leases and six
                    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 nine months ended
                    September 30, 2005 and 2004, remarketing fees were paid in
                    the amounts of $17,000 and $57,000, respectively.

                                                                              10
<PAGE>

                    The Partnership's share of the computer equipment in which
                    they participate with other partnerships at September 30,
                    2005 and December 31, 2004 was approximately $840,000 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 September 30, 2005 and December 31, 2004 was
                    approximately $1,536,000 and $2,249,000, respectively. The
                    Partnership's share of the outstanding debt associated with
                    this equipment at September 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 September 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 September 30, 2005:

                                                                       Amount
                    ------------------------------------------------------------
                    Three months ended December 31, 2005              $ 8,277
                    Year Ended December 31, 2006                       14,030
                    ------------------------------------------------------------

                                                                      $ 22,307
                    ============================================================

5. RELATED PARTY    RECEIVABLES/PAYABLES
   TRANSACTIONS
                    As of September 30, 2005, the Partnership's related party
                    receivables and payables are short term, unsecured, and
                    non-interest bearing.

                    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 affiliates in connection with
                    the administration and operation of the Partnership. During
                    the nine months ended September 30, 2005 and 2004, the
                    Partnership recorded $102,000 and $214,000, 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
                    nine months ended September 30, 2005. During the nine months
                    ended September 30, 2004, equipment acquisition fees of
                    approximately $1,000 were earned by the General Partner.

                                                                              11
<PAGE>

                    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 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 nine
                    months ended September 30, 2005 and 2004, equipment
                    management fees of approximately $3,000 and $31,000,
                    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 nine months ended September 30, 2005 and
                    September 30, 2004, equipment liquidation fees of
                    approximately $2,000 and $5,000, respectively, were earned
                    by the General Partner.

                    Notes payable consisted of the following:
<TABLE>
<CAPTION>
                                                                     SEPTEMBER 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
                    September, 2006.                                     48,000           33,065
                                                                       -------------------------
                                                                       $ 48,000        $ 115,967
                    =============================================================================
</TABLE>

                                                                              12
<PAGE>


                                    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 September 30, 2005 are as
                                    follows:
<TABLE>
<CAPTION>
                                                                                                            Amount
                                                                                                    --------------
                                    <S>                                                             <C>
                                       Three months ended December 31, 2005                         $       15,761
                                        Year ended December 31, 2006                                        32,239
                                                                                                      ------------
                                                                                                    $       48,000
                                                                                                      ------------
</TABLE>


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



Nine months ended September 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
                                                  $    15,082   $   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:

Nine months ended September 30,                          2005          2004
---------------------------------------------------------------------------
Offsetting of receivables from CCC with
   payables to General Partner                    $         -   $   107,356
===========================================================================







                                                                              13
<PAGE>

       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 nine months ended September
30, 2005 and 2004 were net proceeds received from sale of equipment totaling
approximately $80,000 and $154,000, and the repayment of receivables from CCC of
approximately $132,000 for the nine months ended September 30, 2004. The primary
uses of cash for the nine months ended September 30, 2005 and 2004 were for the
payment of preferred distributions to partners of approximately $104,000 and
$346,000, respectively. There were no capital expenditures for the period ended
September 30, 2005. Capital expenditures of approximately $4,000 were made for
the period ending September 30, 2004.

For the six month period ended September 30, 2005, the Partnership used cash
flows from operating activities of approximately $112,000. This includes a net
loss of approximately $373,000, and depreciation and amortization expenses of
approximately $291,000. Other noncash activities included in the determination
of net income include direct payments of lease income by lessees to banks of
approximately $15,000.

For the six month period ended September 30, 2004, the Partnership used cash
flows from operating activities of approximately $84,000, which includes a net
loss of approximately $394,000 and depreciation and amortization expenses of
approximately $592,000. Other noncash activities included in the determination
of net loss include direct payments of lease income by lessees to banks of
approximately $508,000.

Cash is invested in FDIC insured, interest bearing money market accounts,
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 September 30, 2005, the Partnership had future minimum rentals on
non-cancelable operating leases of $8,000 for the balance of the year ending
December 31, 2005 and $14,000 thereafter. As of September 30, 2005, the
Partnership had future minimum rentals on noncancellable capital leases of
$16,000 for the balance of the year ending December 31, 2005 and $33,000
thereafter. At September 30, 2005, the outstanding debt was $48,000, with
interest rates ranging from 5.00% to 6.5%, and will be payable through September
2006.

The Partnership's share of the computer equipment in which they participate with
other partnerships at September 30, 2005 and December 31, 2004 was approximately
$840,000 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 September 30, 2005 and December 31,
2004 was approximately $1,536,000 and $2,249,000, respectively. The
Partnership's share of the outstanding debt associated with this equipment at
September 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 September 30, 2005 and December 31,
2004 related to the equipment shared by the Partnership was approximately $0 and
$1,000, respectively.





                                                                              14
<PAGE>

RESULTS OF OPERATIONS

Three Months Ended March 31, 2005 compared to
  Nine months Ended September 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 nine months ended September 30, 2004,
the Partnership recognized income of approximately $622,000 and expenses of
approximately $1,016,000, resulting in a net loss of approximately $394,000.

Lease income decreased by 95% to approximately $29,000 for the three months
ended March 31, 2005, from approximately $619,000 for the nine months ended
September 30, 2004, due to the fact that more lease agreements ended since the
nine months ended September 30, 2004 and no new leases were purchased during
that time period.

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 75% to approximately $83,000 for the three months ended March 31,
2005, from approximately $338,000 for the nine months ended September 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 $31,000 for the nine months ended September
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
81% to approximately $111,000 for the three months ended March 31, 2005, from
approximately $592,000 for the nine months ended September 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 $185,000 for the nine months ended September 30, 2004,
for a net loss of approximately $30,000.





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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
September 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
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 September 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






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<PAGE>

         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


                                    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

November 14, 2005                   By: /s/ Kimberly A. Springsteen
-----------------                   -------------------------------
Date                                Kimberly A. Springsteen
                                    President


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