Ok. So after searching and reading and trial/error, i finally have video/audio. May not be the best method or (audio) quality, but at least it works.
Code:
ffmpeg -i movie.avs -c:v libx264 -x264-params preset=slow:tune=grain -c:a aac -strict experimental -b:a 160k -y video.test1.mkv
-x264-params preset=slow:tune=grain --- so that i'm actually using x264's encoding parameters and not ffmpeg's. I just learned about that while searching for the audio support. I was using ffmpeg's preset and params in previous practices

But the only problem I have is that ffmpeg is using an older version x264 and not the current one.