A new derivation of reduced magnetohydrodynamic (MHD) equations is presented. A multiple-time-scale expansion is employed. It has the advantage of clearly separating the three time scales of the problem associated with (1) MHD equilibrium, (2) fluctuations whose wave vector is aligned perpendicular to the magnetic field, and (3) those aligned parallel to the magnetic field. The derivation is carried out without relying on a large aspect ratio assumption; therefore this model can be applied to any general toroidal configuration. By accounting for the MHD equilibrium and constraints to eliminate the fast perpendicular waves, equations are derived to evolve scalar potential quantities on a time scale associated with the parallel wave vector (shear-Alfven wave time scale), which is the time scale of interest for MHD instability studies. Careful attention is given in the derivation to satisfy energy conservation and to have manifestly divergence-free magnetic fields to all orders in the expansion parameter. Additionally, neoclassical closures and equilibrium shear flow effects are easily accounted for in this model. Equations for the inner resistive layer are derived which reproduce the linear ideal and resistive stability criterion of Glasser, Greene, and Johnson [Phys. Fluids 18, 875 (1975)].